Norwich Union is to launch a new savings plan. The Guaranteed Capital Plan gives investors exposure to the property and stock markets and guarantees to return at least the original investment.
Plan links return to property market, FTSE 100 and deposit account
Norwich Union is to launch a new savings plan. The Guaranteed Capital Plan gives investors exposure to the property and stock markets and guarantees to return at least the original investment.
The plan links investors’ money to the Halifax House Price Index, FTSE 100 and a one-year fixed rate deposit account. To provide the potential for growth without risking capital, the plan splits investors’ returns into three elements:
- 34% is invested in a one-year fixed rate account paying 8% gross. After one year returns will be paid to the investor
- 33% is linked to the Halifax House Price Index. After six years investors are guaranteed all their original investment plus 75% of any growth in the index subject to averaging in the final year
- 33% will be linked to the FTSE 100. Investors are guaranteed to get their original investment back plus 75% of the growth of the index over the six years subject to averaging in the final year.
It will be available from 10 October 2005, the minimum investment is Ł3,000 and the plan’s start date is 16 December 2005.
Neil Davies, head of investment at Norwich Union, said: “The plan is ideal for those investors who are reluctant to move their savings from a deposit account, but would like the opportunity to benefit from investing in a range of assets without risking their capital. It will appeal to those investors who remain cautious about the investment markets but who seek potentially higher returns backed by a guarantee.”
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Press office contacts:
David Gwyer 01904 452828 Out of hours 07800 699508
James Evans 01904 452791 Out of hours 07800 699525
Rob Pell 01904 452659 Out of hours 07800 699563
Cheryl Cox 01904 452617 Out of hours 07800 695275
Notes to editors:
About the Norwich Union Guaranteed Capital Plan
The Guaranteed Capital Plan is designed to be held for the full six-year term. Investors’ capital is guaranteed to be returned only on maturity of each of the three elements. Investors who with draw their money before maturity will be liable to an early withdrawal fee.
How the plan might work
The following scenarios are examples only and give an indication of how the plan could work over six years
Example 1 – Both indices rise
Initial investment Ł10,000
Total return: Ł12,054
Total gain Ł2,054
| Element | Initial amount | Calculation of return | Return after 1 year | Return after six years |
| 1yr fixed rate | Ł3,400 | 8% gross | Ł3,672 |
|
| FTSE linked | Ł3,300 | 27%* |
| Ł4,191 |
| HHPI linked | Ł3,300 | 27% |
| Ł4,191 |
| Totals | Ł10,000 |
| Ł3,672 | Ł8,382 |
*This figure assumes that the index has grown by 36% over the term (allowing for the 12-month final averaging).
Example 2 – Both indices fall
Initial investment Ł10,000
Total return: Ł10,272
Total gain Ł272
| Element | Initial amount | Calculation of return | Return after 1 year | Return after six years |
| 1yr fixed rate | Ł3,400 | 8% gross | Ł3,672 |
|
| FTSE linked | Ł3,300 | -27% |
| Ł3,300 |
| HHPI linked | Ł3,300 | -27% |
| Ł3,300 |
| Totals | Ł10,000 |
| Ł3,672 | Ł6,600 |
Even though both indices have fallen in this example, the initial capital from the FTSE and HHPI elements is still guaranteed at maturity.
Example 3 – FTSE 100 rises and HHPI falls
Initial investment Ł10,000
Total return: Ł11,163
Total gain Ł1,163
| Element | Initial amount | Calculation of return | Return after 1 year | Return after six years |
| 1yr fixed rate | Ł3,400 | 8% gross | Ł3,672 |
|
| FTSE linked | Ł3,300 | 27%* |
| Ł4,191 |
| HHPI linked | Ł3,300 | -27% |
| Ł3,300 |
| Totals | Ł10,000 |
| Ł3,672 | Ł7,491 |
* This figure assumes that the index has grown by 36% over the term (allowing for 12 month final averaging)
Norwich Union is one of the UK's biggest insurers. It is a leading provider of life, pensions and investment products and one of the largest Financial Adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
Norwich Union has strategic alliances with building societies and other leading UK brand names including CIS and The Royal Bank of Scotland Group. Norwich Union’s news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media.