Structured product designed for retirees launched

A structured product, specifically designed for the needs of retired people, has been launched by Investec Structured Products in response to the changing demands of the market.

Financial products for people in their retirement have been operating in a notably different market since the pension freedoms were unveiled in April 2015, allowing people aged 55 and over to have unprecedented access to their pension pots.

Investec Structured Products confirmed that its new product – the FTSE 100 Retirement Deposit Plan 1 – is expected to perform well in the “radically different world” created by the new legislation.

Upon launching the product, the firm’s head of intermediary sales, Gary Dale, commented: “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 that the new plan 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”.

The FTSE 100 Retirement Deposit Plan 1 offers fixed annual payments of either 5.25 per cent or four per cent over a six-year term.

Structured products have received a mixed reputation in 2015 after performances failed to live up to expectations in some areas. However, the latest Structured Product Review of the first half of the year confirmed that capital at risk products maturing in the first six months of 2015 made an average annualised return of 8.06 per cent over an average term of 3.28 per cent.

In fact, when overall maturities were addressed the data confirmed that the vast majority of products distributed through independent financial advisers that matured in the six-month period showed gains. A total of 231 reported gains, compared to just four which returned investors’ capital.

The launch of the new retirement comes as the UK Structured Products Association has launched performance indices to attempt to better inform advisers about the market.

Structured products are certainly not suitable as alternative investment products for everyone, but the introduction of the new retirement product and the indices suggests that the industry is looking to provide more regulated access to theses potentially highly profitable investments, where suitable.

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