Pension limit changes from April this year are likely to mean an influx of investors’ money into more adventurous investments, according to a report in Investors Chronicle.
But are the managers of Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) ready for that potential increase of money? Conversations we are having with many of them indicate that they do not have systems to cater for the expected increase in business. As a result, Exact are seeing an increase in interest in their LIBRIS Financial software to solve their problems.
This issue sparks from a change in the law for the new tax year, starting on April 6. On this date, the “lifetime limit” that an individual will be able to invest in a pension will reduce from £1.25 million to £1 million. Above that level, a punitive tax rate of 55 per cent kicks in upon withdrawal.
This change is likely to affect a significant number of high earners and not just those who are just a few years from retirement. People who might be 20 years from retirement could now be thinking that they will eventually breach the £1 million limit.
Investors Chronicle argues that more people will realise they could hit the £1 million lifetime limit and seek alternative investments such as EIS and VCTs, as tax-efficient alternatives. Independent Financial Advisers (IFAs), not just individuals who manage their own investments, are also more likely to be looking closely at EIS and VCT investments, for their clients.
Exact has spoken to several VCT, EIS and SEIS (Seed Enterprise Investment Schemes) providers recently who manage their business on spreadsheets. This, they tell us, makes it difficult to take on new business, let alone report back to IFAs who have invested on behalf of clients.
There is also a growing need for such companies to provide product information more frequently and electronically to the large wealth managers such as St James Place and Barclays Wealth. LIBRIS already provides these facilities.
As a leading software provider for this industry, Exact offers, through LIBRIS Financial, a system that processes the application (even providing this as an external process through hand held devices, either by the client directly or by IFAs). It automates the allocation of the initial investment, taking into account relevant charges to the underlying investment whether it be a VCT holding or multiple holdings in EIS and inheritance tax (IHT) products.
There is a full reporting suite available for clients and IFAs as well as making the data available to LIBRIS’ own portal.
Additional benefits of the system include a full general ledger facility where LIBRIS records every transaction and value in the underlying investments of the product to arrive at a current NAV. The software also has full loan processing facilities for products that take advantage of that type of financing.
Our clients are also now benefiting from the Apps which have been developed, enabling them to monitor remotely the system as well as allowing their clients and IFAs mobile access to their assets under management.
Exact already supplies two of the top 10 VCT managers in the UK and would welcome all enquiries for those looking for software which will improve the management of these types of financial assets, as well as provide the ability to expand the business. The system is completely web based and Exact provides a full hosting service so that no extra infrastructure spend is necessary.
If you think managing your VCT or EIS could benefit from the introduction of wealth management software, call us today on 0207 256 1234, email firstname.lastname@example.org or leave a message on our contact us page.