It is good to see GE Life, part of the biggest company in the world by market capitalisation, back in the high-income plan market. It has a clear goal – to be the first-choice provider of financial services and products to the over 50s – and these plans are an ideal investment for them.
The new plan, called High Income and Growth Plan IV, pays an annual fixed income of 10.25 per cent over three years or growth of 33 per cent tax-free for Isas and Pep transfers. This is equivalent to 11.5 per cent and 41.25 per cent for basic-rate taxpayers. As this plan is Dublin-based, direct investors outside Isas and Peps pay much lower rates of tax on income – only 10 per cent for basic-rate taxpayers and 32.5 per cent for higher-rate taxpayers. Furthermore, it is a good way for growth investors to use up their capital gains tax allowance.
The capital is returned in full provided that the EuroStoxx 50 index does not fall by more than 20 per cent during the term of the investment or, if it does, the final index level is at or above the initial level.
None of the leading fund managers expects European shares to fall significantly further than they already have over the next year and most think they will rise by more than 10 per cent from current levels.
So, over three years, the risk is very low.
Future Value Consultants, the leading independent analyst, rates this bond at eight out of 10 for both higher- and basic-rate taxpayers, which compares very favourably to the average score of 5.75 from over 100 products reviewed.
This looks to be one of the safest plans of its kind and looks likely to give around double the returns from a building society investment without much risk.