InvestmentsAug 19 2015

Investec launches first structured deposit for retirement

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Investec launches first structured deposit for retirement

Investec has claimed to have launched the first structured deposit specifically designed for the retirement market, which offers guaranteed income payments with a bonus payment at maturity, provided the FTSE 100 finishes higher.

The FTSE 100 Retirement Deposit Plan 1 has been developed as an alternative to traditional annuity products and provides a guaranteed income each year, irrespective of the performance of the FTSE 100.

Investec said that at maturity, the product return will be dependent on the performance of the FTSE 100. Fixed annual payments of either 5.25 per cent (option 1) or 4 per cent (option 2) are offered over the six year term.

Option 1 aims to return the full deposit amount provided the FTSE 100 is greater than 90 per cent of its start level at maturity, with option 2 requiring the FTSE 100 to be greater than 75 per cent of its start level at maturity to return the full deposit.

Gary Dale, head of intermediary sales at Investec Structured Products, said that in the period since the government’s pension legislation was announced, it became clear that clients in or approaching retirement were entering a radically different world.

“In today’s financial environment of low interest rates and low gilt yields, it is more and more important to be able to ensure that capital lasts longer and retains its power to provide long-term income throughout the period of retirement.

“We appreciate the importance of secure, sustained income for retirees and we are constantly looking to develop new product shapes to target a wider range of customer needs.”

He added that the new structured deposit will help clients to maximise income from their retirement funds at a time when the need for more competitive retirement is clearly a priority within the post-retirement market.

Chris Taylor, managing director of the Investment Bridge, told FTAdviser: “It’s good to see Investec enter the pensions arena, which is clearly poised to see various new entrants with propositions that will extend the choices that investors have been restricted to thus far.

“The first product shape from Investec is clearly a simple offering, which will be seen as a plus by advisers and investors. In addition, the Investec brand, it’s UK banking licence and ability to utilise it’s deposit wrapper should all help see this first product offering be well received.”

He added that over time he certainly expected to see further innovations from the structured product sector bring more choice to the newly open pension freedoms space.

“This will include options that focus on fixed and secure income streams, that minimise investor exposure to market risk, but I also see scope for the sector to look at ways in which it can do other things.”

The product is only available via self-invested personal pensions.

ruth.gillbe@ft.com