The product, called the FTSE100 Retirement Deposit Plan 1, offers either fixed annual payments of 5.25% (Option 1) on an investor’s capital or 4% (Option 2) over a 6-year term.
While the income is guaranteed, the return of the deposit at maturity is linked to the performance of the FTSE-100 index.
Option 1 aims to return an investor’s full deposit provided the FTSE100 is greater than 90% of its start level at maturity. Option 2 requires the FTSE100 to be greater than 75% of its start level at maturity to return the full deposit.
The plan, which Investec said is the first ever structured product of its type, is only available via a self-invested personal pension (SIPP).
Investec said it has developed the plan in response to the government’s pension’s reforms, which had boosted demand for alternatives to traditional annuity products that would still provide investors a guaranteed income each year.
“This new structured deposit will help clients maximise income from their retirement funds at a time when the need for more competitive retirement income is clearly a priority within the post-retirement market,” said Gary Dale, head of intermediary sales at Investec Structured Products.
“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,” he added.
