Norwich Union is changing the level of income payable on its Monthly Income Plus Fund (MIP) from 0.24 pence per share to 0.20 pence per share from October 2003.
Norwich Union is changing the level of income payable on its Monthly Income Plus Fund (MIP) from 0.24 pence per share to 0.20 pence per share from October 2003. The change will mean that customers will receive an income level of around 6% per annum from October 2003. The current level of income on the Fund is around 7%.
The change to the level of income for the MIP Fund is the first since November 2000, during which time the investment climate has been very difficult. Interest rates are at their lowest level since the 1950s, with the base rate currently 3.50%, the yield on Government bonds has fallen to around 4%, and the FTSE 100 index has fallen by around 38% since 1 November 2000. Set against this backdrop the annual income level of around 6% remains highly competitive.
Norwich Union will also be changing the way the income is paid on the Monthly Income Plus Fund. Currently, income is paid on a fixed level on a monthly basis. With effect from October 2003, the monthly income will be paid out in line with the actual income received from the Fund’s investments in each month. This means the income may vary slightly on a monthly basis, however the Fund will be managed to minimise the changes month by month.
Commenting on the changes, Neil Davies, head of investment product development for Norwich Union, said: "The new income level of around 6% per annum on Monthly Income Plus is highly competitive and strikes the right balance between a good level of income and low risk to capital.
"The current income rate was set nearly three years ago when high quality corporate bonds were yielding 7% and base rates were 6%. The same yield now is around 5% and the base rate a modest 3.50%.
"We believe the remainder of 2003 is likely to see a modest but continued improvement in the global economic recovery. This environment and the changes to the Fund’s distribution rate should prove to be generally supportive for the Monthly Income Plus Fund."
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Notes to editors
- Norwich Union is the UK’s largest insurer. It is a leading provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 70% of the company’s long- term savings business.
- Norwich Union has strategic alliances with building societies and other leading UK brand names including Tesco Personal Finance and The Royal Bank of Scotland Group.
- Norwich Union’s news releases and a selection of images are available from Aviva plc's internet press centre at www.aviva.com/media.