The Association of Policy Market Makers is highlighting that traded endowment policies can be invested within self invested personal pensions and could provide a relatively risk-free alternative investment for those who are now reconsidering their portfolio ahead of A-Day.
Brian Goldstein, chairman of the APMM, says that many investors would be disappointed by the news that the chancellor had removed the tax relief on a number of asset classes which were expected to be eligible for inclusion in SIPPs. He says that this meant that property, fine wines and antiques had effectively been prohibited from SIPPs.
Goldstein says: “With all the build up to SIPPs we are aware that many more investors are interested in managing their own pensions from A-Day in 2006. Those previously lining up to invest in property, fine wines and antiques for their SIPPs, will need to find new homes for their money. TEPs could be considered as part of this alternative investment route.
“Investors have been buying TEPs for use in retirement planning for many years. The policies offer a minimum guarantee, made up of the sum assured plus the bonuses accrued to date, which grows over time. For investors looking to invest in TEPs they can play a relatively risk-free role within a balanced portfolio.
Goldstein adds: “Each policy has a set maturity date so for someone planning for retirement they can be confident of knowing when the policy will pay out. They can time the maturity dates to coincide with major points in their life, for example the year of retirement and every year for five years thereafter. This can play a vital role in investment planning. Anyone investing for retirement should seek professional advice.