Norwich Union is to cut the level of income payable on its £722m Monthly Income Plus (MIP) fund from...
Norwich Union is to cut the level of income payable on its £722m Monthly Income Plus (MIP) fund from 0.24p per share to 0.20p per share from October 2003.
The firm said the cut reduces the income level on the fund to around 6% per year from the current level of around 7%.
Norwich Union blamed the reduction on the 'very difficult' investment climate of the past three years, as well as falls in interest rates.
'The current income rate was set nearly three years ago when high-quality corporate bonds were yielding 7% and base rates were 6%. The same yield now is around 5% and the base rate is a modest 3.5%,' said Neil Davies, head of investment product development at Norwich Union.
From October, the firm will also change the way the income on funds is paid, moving from a fixed monthly payment to a variable monthly amount calculated in line with the actual income received from the fund's investments in each month, Davies said.
This means the income may vary slightly on a monthly basis, he added, but the fund will be managed to minimise the changes month by month.
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