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Julian Gibbs

There is still a huge amount of long-term investment money deposited with

building societies – far in excess of what investors need to cover

emergencies. The problem for investors is that interest rates have fallen

dramatically, with most banks and building societies paying less than 5 per

cent gross on most of their accounts and as low as 1.1 per cent on some

accounts, such as Halifax&#39s Liquid Gold.

However, NDF in conjunction with Abbey National Treasury Services has come

up with a rising income plan with 100 per cent capital security. Income

starts at 6 per cent a year and rises by an amount equivalent to twice or

more of the rise in the yield in the FTSE 100, based on the initial level

of the index.

Over any six-year period, dividends would have risen on average by around

8 per cent a year compound, the lowest rise being 4.1 per cent a year and

the highest rise being 12.9 per cent a year.

Taking a slightly below average rate of 7.5 per cent a year – because

dividend rises over the next year they may well be below average – the

income would rise to 7.8 per cent in the sixth year.

It looks likely that interest rates will remain low for the foreseeable

future, with further cuts likely in the UK as well as in the rest of

Europe. This means building society rates are likely to fall further too.

There is an option for investors to accumulate their income. This would

give them a return of 45.5 per cent assuming a 7.5 per cent growth in

dividends. All these returns are tax-free through an Isa or Pep transfer

and the capital is 100 per cent guaranteed by Abbey National. Commission is

3 per cent.

I see this product as an ideal way for IFAs to help elderly and

ultra-cautious clients with big building society investments to increase

their returns rather than risk reducing them still further.


Changes at Invesco Pensions

Invesco Pensions has appointed John Griffiths as business developmentmanager and Mark McDonnell as head of client services. Griffiths, formerlyemployee benefits manager at Scottish Mutual, takes responsibility formanaging new client relationships while Griffiths, who joins from ScottishMutual, will work with consultant actuaries and trustees in the Midlandsand the North.

Platform broadens fixed rate range

Platform Home Loans is looking to the adverse credit market with the introduction of the one-year fixed rate mortgage.Platform specialises in the adverse credit market, which is made up of people who are unable to get a mortgage from a mainstream lender as they have had trouble paying their mortgage in the past, have levels […]

Abbey profits up 15 per cent

Abbey National has announced its profits are up 15 per cent to £1.06bn for the first 6 months of this year, from £922m last year.The announcement comes a fortnight after trade secretary Patricia Hewitt blocked Lloyds TSB&#39s takeover attempt.Abbey&#39s biggest growth area was in life insurance, with Abbey National Life posting a 31 per cent […]

Verity&#39s VIEW

Until last week, for all the brouhaha about Equitable Life, it was stillvery difficult to pin down exactly what its policyholders had lost. Equitable had stopped trading. So what? Existing policyholders could ifthey wanted still continue contributing to their plans. Equitable&#39sinvestments might grow more slowly because reserving rules required it tosell equities and buy gilts. […]


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