From 21 July 2003, Norwich Union will offer the "Monthly FixedIncome Plan", a new tranche based, lump sum investment planoffering an attractive level of fixed monthly income.
The key features of the Plan are:
Monthly Fixed Income Plan should appeal to investors who:
Commenting, Neil Davies, head of investment product developmentat Norwich Union said: "Monthly Fixed Income Plan endeavours toprovide investors with an attractive rate of income in theprevailing economic conditions.
"We believe the time is right for a big named brand such asNorwich Union to offer this type of plan, which meets the obviousand increasing demand for an attractive level of fixed income."
Gross monthly income is fixed at 0.47% per month.
For new Isa investments only (not transfers or directinvestments), there is an Annual Option – where income of5.75% is paid annually. For new Isa investments, and Isa/Peptransfers in, there is a roll up option - the Single Option - whichwill pay a single payment equivalent to 31.28% of the originalamount invested at the end of the full five year term.
Outside of an Isa, income is paid net of 20% tax. Higher ratetax payers will have an additional tax liability that they shoulddeclare on their tax return. Non tax payers, and lower rate taxpayers, may be able to reclaim all or some of the tax paid on theirinvestment.
Investors can choose to shelter some, or all, of theirinvestment in a mini or maxi stocks and shares Isa, subject to theGovernment’s prescribed limits.
Existing Isas and Pep investments can be transferred into thePlan, although these transfers must be for the full value in anytax year - no partial transfers are allowed. Investors must havecompleted transfer applications by no later than 15 August2003.
Over and above the Government’s Isa/Pep limits, there isno maximum investment limit into the Monthly Fixed Income Plan.
Managing The Risk To Capital
Capital will be returned in full unless both:
Return of capital is based on 100% of the amount originallyinvested and will be returned at the end of the five year periodprovided that both of the above conditions have not beenbreached.
In other words, if the FTSE 100 Index is at 4,000 on 19September 2003 (the commencement date), it would need to fall to2,800 or less during the five year period, and also fail to recoverits starting position by the end of year five, for a breach tooccur.
Where a breach does occur, investors will lose 1% of theirinvestment for every 1% that the FTSE 100 Index is below itsstarting level at the end of the five year term.
(The underlying assets are provided by an A+ rated company. AnA+ rating from Standard and Poor’s means the borrower islikely to repay their debt at the end of the five years, but thisis not guaranteed. If they do not repay the debt, Norwich Unionwill not guarantee either to pay the income or to return theinvestor's capital.)
There is an implicit initial charge of 6% which the productterms take full account of. There are no further charges.
Press office contacts:
Ian Beggs - 08703 66 68 71/07790 487533
James Evans - 08703 66 68 78/07790 487105
Louise Goffee - 08703 66 68 70/07810 057362
Lorna Wiltshire - 08703 66 68 78/07788 471849
Notes to editors
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