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Greater choice from Investec’s income deposit plan

Investec Structured Products has introduced a FTSE 100 linked deposit plan that provide a choice between a rising annual or monthly income and a fixed annual or monthly income paid over five years, depending on index performance.

Option one of the FTSE 100 income deposit plan 13 potentially pays five annual payments that increase by 1 per cent a year, from 2.75 per cent in year one to 6.75 per cent in year five, provided the closing level of the index does not fall by more than 50 per cent during the observation period. Alternatively, investors may opt for  monthly payments that increase by 0.08 per cent a year per year, from 0.21 per cent in year one to 0.53% in year five.

If the closing level of the FTSE 100 falls by more than 50 per cent during the term income payments will stop and Option two of plan potentially pays five annual payments of 4.5 per cent provided the index does not fall by more than 50 per cent during the term. The monthly alternative is 60 payments of 0.36 per cent.

For all options, if the closing level of the FTSE 100 falls by more than 50 per cent during the term income payments will stop and roll over so it can potentially be paid out at subsequent payment date. Income ayments will restart if and when the index recivers to at least its initial value. These payments will include any rolled up income if the average closing level of  the index in five days up to and including the payment date is above the initial value.  Investors in all options of the plan will also receive a full capital return at the end of the term, regardless of index performance.

This plan explores new ground in catering for investors who want a rising income or a level income within the same plan, while also providing full capital protection for all investors. However, some advisers may see this plan as too complex and unsuitable for clients who need the certainty of a regular income that cannot be achieved if payments are linked to index performance.

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