Savers 'seek alternatives' for private wealth management

Private wealth management services may be advising clients to explore new ways of consolidating assets, as the Bank of England maintained interest rates at 0.5 per cent last week.

High-interest savings accounts have long been a popular option for private wealth management, but low interest rates mean purchased life annuities (PLAs) are gaining popularity, according to the Daily Mail.

PLA users pay a lump sum in return for a regular income. Unlike a traditional bank account, the investment cannot be recovered, but the returns are guaranteed for life.

Savers also benefit from tax rules concerning the package. Part of the payment is treated as a return of the buyer’s capital and consequently is not taxed, reports the paper.

Experts note the device guarantees security of income and is becoming increasingly popular with older individuals interested in wealth management who are frustrated with low returns on savings accounts.

SharingPensions.co.uk suggests net income from a PLA could be up to 30 per cent higher than investment with a bank or building society. The scheme would benefit individuals who hold the annuity for many years, as it will pay out for the life of the bearer. ADNFCR-2318-ID-19834560-ADNFCR