# Are summit funds with EBS worth holding onto or should I move funds?



## Sue Ellen (9 Jun 2013)

I have some money invested in the Growth and Balanced Funds with EBS for some years now and am just wondering if it is still a good idea to leave it there?  I'm not big into risk so as the funds seem to have picked up over the last few years I'm wondering if now is a good time to get out?


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## Brendan Burgess (9 Jun 2013)

You really need to review your entire finances - borrowings, other investments, etc.  It's not possible to say if this fund is appropriate for your needs or not.

Having said, that it's a reasonably good stand-alone fund, and the money is as good there as anywhere else.

If the fund is worth less today than you invested in it, then you should retain it as any gains from here until the purchase value will be free of tax. 

Let's say you invested €20,000 in it which is now worth €15,000.

Say  you cash the Summit Fund and invest it in the Evergreen Fund from New Ireland. Say you later  cash the Evergreen Fund when it is worth €20,000, you will pay 30%(?) exit tax on the profit of €5,000. 

By comparison, if you leave the money in the Summit Fund and cash it when it recovers to €20,000, you will pay no tax on it.


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## DK123 (29 Mar 2014)

Hi Brendan.i also have money invested in the summit growth fund since 2007.If i add say 10k to it now will i have to pay tax on this 10k if i exit in say 5 years.Thanks


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## monagt (29 Mar 2014)

> By comparison, if you leave the money in the Summit Fund and cash it when it recovers to €20,000, you will pay no tax on it.



If the fund is old then Tax may be deducted within the fund and the payout will be Tax Free.

Perhaps, some of the experts here can clarify on the funds that in the past deducted tax within the fund and paid out nett and when the regime changed where the payouts are now gross.


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## Baracuda (7 Apr 2014)

"Net Funds" policy's closed to new business in April 2001 however if you have an existing policy which was taken out prior to this date it maybe possible to invest new funds depending on T&C's. The current rate of tax for these funds is "Standard Rate Tax @ 20%" (this should not be confused with income tax) The funds pay tax on a year by year basis at source. These type of funds have a very clear advantage when compared to Gross Roll Up Funds due to the taxation

 "Gross roll up funds" were introduced in April 2001 for new business. The funds only pay tax (41% currently) at time of surrendering the investment or on the 8 anniversary which ever is the sooner. The possible advantage of these funds is that the tax that would have been paid in a Net Funds investment can now be used to further the investment returns. Another possible advantage if considering new investment is that the current rate of tax maybe reduced from 41% in future years (wont be holding my breath for that one for a while yet!)


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## Eeyore (8 Apr 2014)

Does anyone know how the 8 year deemed disposal works for Summit Funds? I have been making monthly payments into a Balanced fund account since 2004 and I have received no notification about a deemed disposal which I would have expected once 8 years had elapsed. I wrote to Summit Asset Managers and EBS earlier this year requesting details about this but have got no reply from anyone yet.


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## Baracuda (8 Apr 2014)

Summit funds are managed on behalf of EBS by Irish Life Investment Managers. You should have received a statement of deemed disposal from EBS providing of course that the fund was returning a profit on the 8th anniversary.

Get back on to EBS in writing and keep a copy of all communications that you have with them in regard to this.


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## Eeyore (8 Apr 2014)

Thanks Baracuda. The fund was in profit at the 8th anniversary though it may be the case that the units bought in 2004 were not in profit in 2012. In any case I have not received any communication from EBS other than an annual statement detailing the payments made and units bought each year.


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## meagain (10 Apr 2014)

Hi Baracuda

"Net Funds" policy's closed to new business in April 2001 however if you have an existing policy which was taken out prior to this date it maybe possible to invest new funds depending on T&C's. The current rate of tax for these funds is "Standard Rate Tax @ 20%" (this should not be confused with income tax) The funds pay tax on a year by year basis at source. These type of funds have a very clear advantage when compared to Gross Roll Up Funds due to the taxation"

Are you clear that its only the 20% tax deducted by the funds themselves  that is payable by individuals on old "pre April 2001" funds and no other taxes?

Seems a bit unusual and would make any such old fund worth holding on to and one that could receive new contributions today very valuable from a tax perspective? Has the Revenue gone to print anywhere on this?


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## Baracuda (11 Apr 2014)

Hi meagain

Yes the only tax payable is at source and is 20%. There is no other tax liability to the policy holder. 

At  first glance it would appear that there is an advantage to Net Funds  but there is a lot of other factors that would need to be considered  before anyone should invest should they have a pre April 2001 investment  such as but not limited to; 

Bid/offer spread, Management  Charges, Gross funds have better returns in a bear market as tax is not  deducted annually, if you are making an investment today the Gross funds  will not pay tax for 8 years and exit tax may have reduced to more  normal rates by then etc.

I am sure revenue would has a  Practioners Handbook in relation to how Net Funds are treated for tax  but unfortunately I do not have a link! I would think that there is only  a limited amount of people that still have Net Funds policies and thoes  that have are probably "whole of life unit linked life assurance  policies"


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## Eeyore (11 Apr 2014)

I got the following response by email from EBS on the deemed disposal issue.

_"Your investment is not subject to any deemed disposal at the end of an eight year period. We have received a derogation from the revenue in respect of this fund and there will be no deemed tax. Tax on any gain will only be on encashment from the fund."_

They are going to confirm this in writing. I'm surprised by this as I was sure that an investment fund opened in 2004 would be subject to deemed disposal.


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## icon987 (4 Sep 2014)

I hold a combination of Balanced and Growth funds (50% each) from the SSIA times. I have been tracking the value of both the funds since the conclusion of contributions in April 2007. As of today this is the first time that both funds combined have had a value that is great than that of April 2007. The Balanced fund has been better for some time but the Growth just changed for the better. 

Only took 7 years!


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## monagt (4 Sep 2014)

> Tax on any gain will only be on encashment from the fund."



Is Tax not paid within the fund as its Pre some date (others will know more about these dates) and the value shown is the nett value which is paid upon encashment


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## ClubMan (18 Apr 2018)

Sorry for bumping such an old thread but I just wanted to correct something above that may have been correct at the time but which is no longer correct.
The information that follows is based on a detailed discussion that I had with the Summit Fund managers just today...

Old net funds are no longer taxed at 20% but are taxed at 41% - payable within the fund so that the statement valuation is identical to the encashment valuation.
So unfortunately there is no tax advantage in investing in these funds - which disappointed me because I have one and thought that I was going to be able to do some legitimate tax avoidance... :-(

Gross funds are not taxed within the fund but are taxed on encashment at 41% on the relevant growth so the statement valuation is a gross valuation and the net encashment valuation will be less if there is a taxable gain

They also clarified that the 8 year deemed disposal rule did apply to gross funds a few years back but at the time most were under water so there was nothing to tax and since then they did get a derogation from Revenue so that they don't need to apply this rule and they just renewed it again (for another 5 years I think?) last year.

Hope this helps somebody else as I found it difficult to get authoritative word on this myself!


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## Brendan Burgess (31 Jul 2020)

Can I bump this yet again, as I have been asked for advice on it. 

My friend has a very old fund. She reckons she invested €40k and it's now worth €60k. 

She has a further €24k to invest. 

My suggestion was that she should add it to the existing fund. 

If the fund does well, the gains will be taxed at 41% .

If the fund does badly the losses on the €24k can be set against the gains on the existing investment.

In other words, if she bought a separate Irish Life fund and both funds fell by 20%, she would be unable to use the losses of the Irish Life Fund against the gains in the Summit Funds. 

Brendan


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## PMU (31 Jul 2020)

I have previously invested in Summit funds and cashed out when they achieved their objective.  I note the funds I invested in are no longer available and there is now a rather restricted range of funds, which would indicate a lack of commitment from EBS to this investment product.

I note from e.g. the Balanced Fund KID https://www.ebs.ie/content/dam/ebs/summit-fund-reports/investment-balanced-fund.pdf that the entry charge is 5%. i.e. 1,200 on an investment of 24,000.   Also the ongoing charges are 1.67%.  These are rather high and does the fund performance indicate such charges are justified?   (Note, they may have a lower rate for an existing investor, or for additional investment in the same fund.  Your friend should check this on her policy document).

Your friend could alternatively invest her further 24k in State Savings products.  Currently, they provide,  just about, a return above the inflation rate.


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## Brendan Burgess (31 Jul 2020)

Hi PMU

I did say that I thought that the charges and tax treatment were too high and that direct investment in shares is better. 

But some people prefer simplicity

Brendan


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## GSheehy (6 Aug 2020)

That's a pretty savage hiding to take on the charges when you compare it to what's currently available on unit linked funds.. She'd also have the 1% Government levy. 

You haven't said when the next deemed disposal is on the existing policy. If it's in 3 years time then that's going to be the deemed disposal date of the top-up as well, as the tax is policy based. The total premiums under the policy before the next chargable event will be €64,000 so losses on the €24K being 'offset' gains on the original €40K I'm not convinced of.


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