Scottish Widows is backing the concept of with-profits products with the launch of two new with-prof...
Scottish Widows is backing the concept of with-profits products with the launch of two new with-profits funds which adhere to FSA plans for greater transparency and protection of policyholder fund.
Available as a single premium bond, The Flexible Options Bond is being launched on Monday 1st July and will adhere to "eight Key principles" set by Scottish Widows but which broadly follow FSA with-profits proposals.
The bond will be available as with-profits growth and income funds - with the growth fund investing more in equities and the income fund placing the bulk of assets in corporate bonds and property - but new features mean investment performance and the general asset mix of funds both funds will be displayed regularly.
Both options will also carry clearly-stated management charges, says Scottish Widows, while an amount of the premiums will be set aside in a Guarantee Account to meet the cost of any guarantees.
"Hedging" techniques will be adopted on the funds so there is less of a need to change the core asset holdings.
And all investment returns of the funds, after charges, will be used for the benefit of policyholders as a whole - so none of the return is passed to shareholders, policyholder assets will not be used to build an inherited estate and the assets set aside will not exposed to the liabilities of any other funds, says George Andrew, Head of Business Development at Scottish Widows.
"The operation of the Guarantee Accounts involves hedging techniques, meaning there is less need to change the core asset mix when investment conditions change. A key point is that the investment managers, Scottish Widows Investment Partnership, can choose to change the mix for investment reasons, thus addressing a key area of concern to IFAs."
Scottish Widows is aiming to set charges around 1% - in line with other with-profits providers, carrying an annual management charge of 0.85% on the growth fund and 1% on the income fund.
Establishment fee is set at 0.5% for the first five years, but there is no bid/offer spread.
IFA commissions are set at either 6.5% initial commission or 4.5% initial plus 0.5% trail fee.
All Scottish Widows literature will also be produced to meet as Raising Standards Quality Mark Scheme, as required under its accreditation.
For full product details on the Flexible Options Bond, contact IFAs should call 0845 843 2111.
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