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Axa with-profits bond goes for income

Axa Sun Life is aiming its with-profit income bond at the IFA market.

The bond is a variation of it&#39s existing with-profits bond, but has a higher annual bonus rate at 6.25 per cent. The existing bond currently offers an annual bonus rate of 5 per cent. However, investors will get a lower terminal bonus than those who invest in the existing bond.

The with-profits income bond is designed for investors seeking capital growth and regular income, perhaps during retirement, who would otherwise need to make withdrawals from their original capital.

Investors can still make regular withdrawals if they need to, but if they withdraw more than 7.5 per cent of the bond&#39s value each year during the first five years, they must pay an early surrender penalty.

The penalty incurred depends on which charging structure investors choose. Under the five year plus charging structure, they pay 7.5 per cent in year one, which reduces to 1.5 per cent in year five. If they choose the limited access charging structure, they pay 5 per cent in the first year, which reduces to 1 per cent in year five.

This bond could be a useful option for investors who do not want to be fully exposed to the stockmarket, but they may be wary of with-profits bonds after witnessing some providers cutting annual bonuses as an effect of recent stockmarket turbulence.

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