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GE Life maximises the options

GE Life has established the income option plan 4, a guarantee equity bond that provides a choice of two annual income options, two monthly income options and two growth options.

The plan is linked to the Dow Jones Eurostoxx index and is split into two main options, option 1 and option 2. Option 1 provides annual income of 9 per cent, monthly income of 0.71 per cent or growth of 30 per cent at the end of the three-year term. Option 2 provides annual income of 7 per cent, monthly income of 0.55 per cent or growth of 24 per cent at the end of the term.

The higher returns available under option 1 offer a lower degree of capital protection than the returns available on option 2. Investors in option 1 get all their original capital back provided the index never falls by more than 33.33 per cent during years two and three without recovering to its starting level. If this does not happen, capital is reduced by 2 per cent for every 1 per cent fall in the index.

Investors in option 2 get all their original capital returned unless the index falls by more than 51 per cent in years two and three without recovering to its start level. If it falls beyond 50 per cent without recovering, investors will lose 2 per cent of capital for every 1 per cent fall in the index.

The bond is likely to be of interest only to sophisticated investors who understand that they could lose capital at a higher rate than any fall in the index. The product is designed to give investors a wide choice of income and growth options, but the end result could confuse them.


Pass masters

Reading Ian Thomson&#39s article about Pass (Money Marketing, January23) revealed what this industry can do if it has a united mind to doso. What a crying shame it would be if all the cooperation, pensionexpertise, experience and record of success, etc, were allowed to goto waste if Pass is wound up.As a relatively small IFA,I […]

Packaging protection

For months, it has been well nigh impossible to have a conversationwith anyone about group income protection without the subject ofpensions and ill health early retirement rearing its head.The basic storyline is convincing enough. In the good old days of the20th Century, when stockmarkets used to rise, most defined-benefitpensionschemes enjoyed the luxury of boasting investment […]

Brewin Dolphin Securities offer fixed fee service

Brewin Dolphin Securities execution only telephone and online division Stocktrade, is offering a £14.50 minimum fixed fee for dealing shares up to the end of the tax year. Investors will be able to trade at this price regardless of the size and frequency of the transactions.

Fund firms bear brunt of criticism over splits

IFAs escape with little criticism from the Treasury selectcommittee&#39s report into the split-cap investment crisis, publishedlast week, which reserved its harshest comments for fund managersresponsible for the products.The FSA has also been largely let off by the committee, which onlystates that the regulator had not been proactive enough introubleshooting and that responsibility for split caps […]

FAMR – a familiar response

Pension specialist Fiona Tait takes a look at the Financial Advice Market Review and assesses the three areas where it suggests improvements can be made With significant budget changes ruled out (for a while anyway), the pension community briefly turned its attention to the FCA’s final report on its Financial Advice Market Review (FAMR), hoping […]


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