The, as-yet-unnamed, product will be domiciled in the Isle of Man and will offer savers the usual tax benefits of an offshore bond.
However, unlike its currently available counterparts, the product will have a relatively low initial lump sum requirement and will not require savers to make set amount investments each month.
This means, once a saver has commenced the scheme with an initial lump sum – likely to be set at a minimum of £30,000 – the investor will be able to make regular monthly contributions in line with what they are able to afford at that stage in their life.
Simon Willoughby, head of proposition at Axa Wealth International, who is designing the product, said:
“The UK offshore sector has only really been targeted at asset rich clients with in excess of £50,000 available for a lump sum.
“We started to look at what this client looks like when they are 20 to 25 years younger than the average of age 58 at which we are capturing them now. We found these people have modest capital sums but are income rich.”
The head of proposition explained the product, which is pencilled for launch in April or May next year, has only been made possible in the UK because of the Retail Distribution Review (RDR).
He explained before the RDR there had been a drive, whether consciously or not, for the industry to create “remuneration events” and that, without this, advisers are more likely to sell products which span a client’s entire life.
“Freed from the constraints of commission, the motivation from advisers is to create multiple client advice points (fee-paying opportunities), but that doesn’t necessarily mean selling different products,” added Willoughby.
“Having looked at it in detail again, we came to the view that it is possible to meet the needs of different life stages within one product rather than by selling separate products to meet life stages.”
