New protected equity bond offered by Nationwide
From today, Monday 1 March 2010, Nationwide Building Society offers the Protected Equity Bond - a deposit-based plan which offers returns linked to the performance of some of the world's leading stock market indices.
The Protected Equity Bond currently available is the Stock Market Linked Savings Bond (SMLSB) 2 provided by Legal & General (L&G). The Protected Equity Bond is designed to return a minimum 11.00% gross (1.75% AER) at the end of six years. Subject to final year averaging, there is also the potential for further stock market linked growth of up to 50% of the original investment when held for the full six years. If the maximum potential return is achieved, this is the equivalent to 6.99% AER.
As the Protected Equity Bond does not invest directly in company shares or investment funds, balances are protected from any negative stock market movement.
Nationwide provides a range of options to help customers make the most of their full annual ISA allowance and the Protected Equity Bond is available as both a deposit plan and as a cash ISA.
Increased annual ISA allowance for all
On 6 April 2010, the increased annual ISA allowance limit of £10,200 will be available to all, giving consumers a bigger tax break opportunity on their savings and investments. People aged 50 or over on, or before 5 April 2010, are already entitled to the increased overall annual ISA allowance limit.
Of the new £10,200 annual ISA allowance, up to £5,100 of this can be invested in a cash ISA and the remaining amount in a stocks and shares ISA. Alternatively, up to the full annual allowance can be invested in a stocks and shares ISA.
Until the new tax year, the annual ISA allowance limit for the under 50s is £7,200, of which up to £3,600 can be invested in a cash ISA and the remaining amount in a stocks and shares ISA, or up to the full amount in a stocks and shares ISA.
Back-to-back ISA option
The end of the tax year is fast approaching and Nationwide encourages all consumers to make the most of their annual ISA allowance before it is lost forever.
As the Protected Equity Bond spans both the 2009/2010 and 2010/2011 tax years, customers will be offered the option to invest both years' subscriptions in a single branch appointment when applying for a Protected Equity Bond ISA before the end of the tax year.
This means that the over 50s can save up to £20,400 tax-efficiently in just one single visit to a Nationwide branch, while the under 50s can save up to £17,400 tax-efficiently in a range of stocks and shares ISAs and the Protected Equity Bond ISA. This will save time for customers and therefore make it easier for them to make use of their tax-efficient annual ISA allowance.
ISA transfers
Within the ISA, customers can also transfer their previous year's cash ISA allowances without it counting towards their current year allowance. This means that consumers can save previous years' cash ISA balances in a Protected Equity Bond ISA, potentially benefiting from higher returns compared to deposit-based cash ISAs.
Combination Savings Bond
Customers who invest in the Protected Equity Bond also have the opportunity to take out an exclusive one year fixed rate Combination Savings Bond paying 4.00% gross p.a./AER, based on the annual interest rate.
The Combination Savings Bond is exclusively available for customers who invest in the six year Protected Equity Bond at the same time and could help savers make the most of their money in the current low interest rate environment. The minimum investment of the Combination Savings Bond is £3,000 and the same amount or more must be invested in a six year Protected Equity Bond.
Robin Bailey, Nationwide's director for investments and savings, said: "With the end of the tax year fast approaching, many people will be looking to use up their annual ISA allowance before they lose it forever. The Protected Equity Bond - or PEB - is available as a cash ISA as well as a deposit account to help customers try to really maximise on the potential returns available.
"The PEB provides an alternative option for those who want to see potentially higher returns on their savings, but do not like the idea of losing their capital if stock markets fall. This is because - unlike some stock market linked investments - the PEB is designed to protect customers from any negative stock market movement. It's also designed to return your capital plus a minimum of 11.00% gross - 1.75% AER - after six years, as well as a potential growth rate of up to 50% of your original investment if the stock markets do well.
"In addition, the one year fixed rate Combination Savings Bond, which can only be opened at the same time as a PEB, continues to offer an additional way to help savers make their money work harder."