Demand for annuities is dwindling following recent pension reforms introduced by the UK Government. A typical pension pot of £50,000 now returns 6.4% per annum less than it would at the start of the year, according to the Financial Times. Many retirees are taking advantage of the option to withdraw large sums from their pension pot in favour of investment vehicles with higher rates of return.
Proper Investment Choices
Risk is a factor in all investments, which is why any decision to cash out a pension fund requires a great deal of due diligence. In the past, investments with a 100% capital protection would benefit from this reform, but few are offering decent returns. Even investments with guaranteed returns are failing to impress and this will leave many investors looking at riskier options.
There is no doubt that some people will take their pots offshore, but face tax penalties as a result. Offshore investments may offer slightly higher rates, but even if you opt for a 95% capital protection investment and a guaranteed return of investment (GROI), the risk of breaking even is very real.
Alternative Investments
Diversity is key to ensure risk is managed throughout an investment portfolio. Alternative investments are being sought as part of an investment portfolio as lenders want to keep their money in the UK and wish to place their funds in FCA regulated institutions such as Peer-to-Peer lenders like Wellesley & Co.
With bank interest rates remaining low, the attraction of 3.50-6.32% rates of return per annum has an obvious appeal. Investors who want to invest over longer periods can take advantage of Wellesley’s Peer-to-Peer lending terms that run between thirty days to five years and offer returns of up to 6.32%. Wellesley & Co provide a diversified range of investment options and whatever you choose, our Customer Service Team are always on-hand to offer guidance but cannot provide advice to which is the most suitable investment for you.
Investments made through the Wellesley Platform are not covered by the Financial Services Compensation Scheme. Capital is at risk, and interest is not guaranteed if a borrower defaults.