Income from the plan is fixed and will be paid regardless of index performance at a rate of 0.5416 per cent per month, which is 6.5 per cent per annum.
The plan offers hard protection of 50 per cent meaning the starting index level is only compared to the final index level and a barrier breach can only ever happen at maturity.
If the index finishes down by more than 50 per cent at maturity capital is lost 1 per cent for every 1 per cent that the final level is below its strike.
The plan’s counterparty is Barclays Bank, who have a Standard & Poor’s credit rating of AA- at time of writing.
Minimum investment is £7,200 and £3,600 for Isa transfers and IFA comission is 3 per cent.
NDFA marketing manager Ronan Gelling says: “It may not have the highest headline rate, but the 6.5 per cent on offer is subject to dividend tax, whereas the majority of other income investments are subject to savings income tax.
“Our investment, using preference shares and the dividend tax rules, means that direct investments outside of an already tax efficient Isa are either subject to an effective tax rate of 0 per cent for basic rate taxpayers or 25 per cent for higher rate taxpayers.”