Scottish Mutual launched the Income and Growth Plan 2, today. The product has a term of...
Scottish Mutual launched the Income and Growth Plan 2, today.
The product has a term of five years and two months from the effective date of 3 May 2002. It offers three income options, 8.05% annual, 1.92% quarterly or the growth option which pays out 42% at the end of the plan term.
Capital return is dependent on the performance of the Dow Jones Eurostoxx 50 Index.
The level of the index on 3 May 2002 is compared to the level of the index at all points during the "tracking period" (4 June 2003 to 17 May 2007). If the index during the tracking period is no more than 20% below the level on the 3 May 2002 then capital will be returned in full. If the index does fall by 20%, but the final index level is at least as high as the initial index level, the capital will still be returned in full.
Only if the index falls by more than 20%, and the final index level is lower than the initial index level, will capital be reduced. The capital will be reduced by 1% for each 1% fall in the index if the fall is between 20% and 30%. If the fall is over 30% the reduction will be 2% for each 1% reduction in the index.
The tracking period omits the first 13 months of the plan term in order to provide additional security to a customer's original investment.
Investors have a choice of tax-efficient investment by choosing the maxi ISA or mini stocks and shares ISA and/or the option to invest directly in to the plan by buying shares in a Direct Share Investment.
Nick Kelly, Head of Investment Product Development at Scottish Mutual said: "After extensive market research, we concluded that there is a large demand for lower risk plans, with longer terms, linked to single indices with powerful safety features."
The plan is open from 1 March until 26 April 2002 unless fully subscribed earlier.
The minimum total investment in the plan is £7,000.
The total maximum investment is £500,000.
Commission is 3%.
No income or capital gains tax is payable for shares held within the ISA component.
For shares held within the Direct Share Investment, tax will be payable on income payments at a rate of 10% for lower and basic rate taxpayers and 32.5% for higher rate taxpayers. For the growth option planholders may be liable for capital gains tax.
Full capital return is not guaranteed.
If the plan is surrendered in the early years, the surrender value may be less than the initial investment.
Growth driven by platform business
No preferred charging model
To 1,552 families and businesses
HL and Liberty SIPP slowest
Lifetime and annual allowances