The new plan offers investors the choice of income or growth payments and is designed to allow investors to hedge against possible market falls as both payments are not connected to market performance. Clients can choose to receive quarterly income of 2.075 per cent gross or 8.3 per cent gross annually over a six year period or choose to take 58.5 per cent growth at maturity.
Return of capital is linked to the performance of the FTSE 100 and Dow Jones Euro Stoxx 50 indices. Capital is fully protected until either index falls by 50 per cent during the investment term. If either index does not return to its respective starting point by the end of the term, capital is reduced on a one-for-one basis of the worst performing index. Income or growth payments remain unaffected by movements in the indices.
Keydata says that the markets can fall by up to 49% from their current levels and investors would still receive the quarterly income or growth payments and full return of capital.
Under the plan’s new structure, income is treated as dividends for tax purposes, reducing the client’s potential tax liability. Growth investors are also only liable to a flat rate of 18 per cent tax on growth which exceeds the capital gains tax allowance of £9,200.
The plan is available as a stocks & shares Isa or within a Sipp or Ssas pension scheme. Investment for the plan closes on 22 August 2008 and the deadline for transfers is 1 August.