29 September 2021

  • Useful

Making your money work for you

Do you have a lump sum of between £5,000 to £150,000 to invest? Are you looking for a regular income whilst also looking to preserve your capital investment? If you’ve answered yes to the previous two questions, then Sheffield Mutual’s Income Bond may just be the right product for you.

Sheffield Mutual’s Income Bond provides our members with the ability to invest a lump sum, whilst also having the option to take an income from their capital if required.

This single premium life policy is designed for the medium to long-term (five years+), you have the added flexibility of being able to take an income straight away, or you could leave the money invested to build up bonuses until you are ready to take an income either as a regular payment or as a lump sum.

There is the potential for capital growth as your lump sum (the initial investment) is invested in our with-profits fund from which, depending on investment performance, we aim to pay bonuses each year (currently at 1.75%). On encashment and subject to the conditions outlined below, you will receive the capital balance (the initial investment less income and partial withdrawals) plus bonuses added during the life of the policy. A final bonus may also be paid at the time of maturing the policy.*

If you were to take an income then it is possible to take between 1% and 5% of your capital invested either monthly, quarterly, half-yearly or annually, with no immediate tax implications**. The income paid may come in handy to supplement pension payments or should you take a built-up lump sum, could go towards something like a holiday, car or home improvements.

Please note that the minimum investment for taking a withdrawal of under 2% is £30,000 and the minimum investment for taking a monthly income is £10,000.

It is worth noting that if you were to take the maximum of 5% income each year for 20 years your capital would have depleted, and you would no longer be able to take any further income. Your bonus pot which will have been building through the payment of potential bonuses will sit there and continue to grow until you decide to close the plan or to the point of your death.

'What happens when I pass away' is a very common question: if you were to pass away whilst the policy is active, if in joint name, then the remaining person will become the sole policyholder. If you were the sole name on the plan, then after we have completed the claims process, we would pay to your estate either 101% of the capital balance (the initial investment, less income and partial withdrawals) or the value of the policy (the capital balance plus added bonuses) whichever is greater.

For additional peace of mind, there is a capital guarantee after the money has been invested for at least five years. This has helped to provide comfort and assurance to members during periods of investment uncertainty, as we've seen throughout the pandemic.

A bond with guarantees, the option to take an income, potential for growth and a death benefit, with the added peace of mind that your money could be covered by the Financial Services Compensation Scheme... what's not to like?

If you would like more information or have any questions, please call us on 01226 741 000 to discuss further with one of our business development team.

We are open Monday to Friday, 9am to 5pm and when you call, we aim to answer all calls within two rings.

*Payment of bonuses depends entirely on investment performance and the rate at which annual bonuses have been added and is not guaranteed.

**Tax treatment depends on individual circumstances and may be subject to change in the future.

This blog provides generic information and opinions of the writer and should not be relied upon for making investment decisions. No advice has been provided by Sheffield Mutual. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand. Any reference to taxation is based on the writer's understanding of current tax legislation and practice, which could change in the future.

By Andrew Bonner

Business Development Specialist

Let's keep in touch

Keep up to date with news, offers, competitions and other products and services that we offer via email

Please only include first and last name