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NU in cashback pledge for with-profits bond

In a bid to revive with-profits sales, Norwich Union is to introduce a five-year money-back guarantee on all new with-profits investments into its portfolio bond this year as it endeavours to lure investors back into the market.

The change means that investors are guaranteed their original investment back on the policy&#39s fifth anniversary, regardless of whether markets go up or down, and applies to investments made up until the end of the year or earlier if fully subscribed.

Investment marketing manager Keith Simm says the move demonstrates NU&#39s commitment to with-profits in a market where guarantees are “quite hard to come by”.

He says it has worked closely with the FSA on the guarantee and is confident about its with-profits offering and the guarantee.

The offer is also applicable to offshore with-profits investments in the NU international core fund bond and international with-profits bond and it expects 10,000 new investors to take up the offer this year.

An extra allocation offer of 1.5 per cent will continue to be offered on new investments into the portfolio bond.

Andrew Oliver & Co principal Andrew Oliver says: “Given that a with-profits contract is supposed to be for cautious investors anyway, why should we need a money-back guarantee for what is supposed to be a cautious investment?” Simm says: “It is designed to attract investors back into with-profits by offering a little bit of a safety net for five years. We still have a great belief in with-profits in that it does have a place in the financial planning arena. We believe this type of guarantee is really designed to get investors who have obviously had quite a turbulent experience over the last few years back into equity based investments.”

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