Nationwide launches new Protected Equity Bond

24 January 2012

Nationwide Building Society is today launching a new six-year Protected Equity Bond. The new Bond, available as both deposit and ISA options, protects the customer's original investment while offering the potential for further FTSE 100 Index linked capital growth at the end of six years.

The Protected Equity Bond (PEB) is designed to return a customer's original investment at the end of the six-year period while, at the same time, offering a return linked to the performance of the FTSE 100 Index.

Customers can receive 100% of any growth in the FTSE 100 Index, subject to final year averaging, up to a maximum gross return of 51% gross (equivalent to 7.10% gross p.a./AER*) on the original investment at maturity.

The PEB may provide a solution for customers who would like growth linked to the performance of the FTSE 100 Index, but who do not like the risks associated with direct stock market investment. However, as money is not invested directly in the FTSE 100 Index, investors won't benefit from any dividend income which could have been received if money had been invested directly in shares or investment funds.

The new PEB is the Stock Market Linked Savings Bond 14 provided by Legal & General (L&G) and is available both as a deposit plan and cash ISA.

Summary table

Account name

Legal & General Stock Market Linked Savings Bond 14

Term

Six year deposit plan

Six year ISA

Pre-investment

0.60% gross/AER* from the date of investment until 26 March 2012

Return

At the end of six years, it is designed to return 100% of any growth in the FTSE 100 Index, subject to final year averaging, up to a maximum gross return of 51% of your original investment (if the maximum potential growth is achieved, this is equivalent to 7.10% gross p.a.AER*).

Tax status

Any return is paid net of basic rate tax.

Any return is paid tax-free.

Conditions for bonus payment

N/A

N/A

Withdrawals

No withdrawals permitted before maturity.

Withdrawals of less than £500 are not permitted and customers must maintain a balance of at least £500. Customers could get back less than they originally invested if any withdrawals are made. Customers must also hold the original investment in the ISA for the full six-year term to benefit from the stated potential returns.

Access

Offer available 23 January 2012 to 10 March 2012 via branch, post, internet and phone.
(Please note that we are currently unable to accept Protected Equity Bond ISA applications over the phone).
Limited availability - may close early.
If your application can not be accepted your investment will be returned in full.
Investment start date: 29 March 2012.
Maturity date: 29 March 2018.
Final year averaging: 29 March 2017 to 29 March 2018.

Minimum investment

£3,000

£3,600 for current year cash ISA allowance and for transfers from each ISA Manager.

Maximum investment

Unlimited

£5,340 for the current year cash ISA allowance and unlimited for ISA transfers

Further deposits

No further deposits can be made after opening

Information and rates correct on 23 January 2012

Notes to editors:

*AER stands for Annual Equivalent Rate which illustrates what the interest rate would be if interest was paid and compounded each year. For the Protected Equity Bond, this allows customers to compare more easily any maximum potential returns with other savings accounts. The gross rate of interest is the interest rate payable before any income tax is deducted (if a customer pays tax) and the net rate of interest is the interest payable after any income tax is deducted (if a customer pays tax).

Protected Equity Bond:

  • If the original investment is not held for the full six-year term the final amount returned may be less than the original investment.
  • Customers will not benefit from any dividend income which they could have if they invested directly in the stock markets.
  • The value of the Protected Equity Bond may depreciate in real terms due to inflation.
  • Although this is a Legal & General product, while invested, funds are held by Nationwide as the deposit taker. This means that, from the investment start date, all the way through to maturity, Nationwide will be helping to look after customers' money. Before the start date and after the fixed term, Legal & General put customers' money in a client bank account separate from their own money. If Nationwide, or the bank or building society providing the client bank account were to become insolvent, customers could lose some or all of the money invested.
  • During the fixed term funds are held by Nationwide Building Society and is covered by the Financial Services Compensation Scheme (FSCS) which is designed to help provide compensation in the event of a financial institute failing. The FSCS covers deposit accounts for 100% of the first £85,000 of each customer's eligible claim per firm. Please see the Key Features document for further details.
  • Tax treatment is dependent on individual circumstances. The tax information is based on Nationwide's understanding of current law and HM Revenue & Customs' practice, which can change.
  • Applications are required for all products. Further details of terms and conditions are available on request.
  • Nationwide Building Society is authorised and regulated by the Financial Services Authority under registration number 106078. Credit facilities other than regulated mortgages are not regulated by the Financial Services Authority. You can confirm this at www.fsa.gov.uk or by contacting the Financial Services Authority on 0845 606 1234.

Please note: If you are a customer looking for information on our products and services, please visit the main website.