Five income funds boosted by Budget changes

Fund and wealth managers are still trying to understand the impact of the pension changes George Osborne made in his recent Budget. Richard Romer Lee suggests five funds that are already ahead of the game for those who need an ongoing supply of income.

Five income funds boosted by Budget changes

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This process has been going on for many years as the government attempts to, ahem, simplify the pensions system and as companies have withdrawn defined benefit pension schemes. Neither of them can afford to keep us going!

Another Budget, another change

The latest stage was the announcement in George Osborne's budget that from April 2015 people will be able to take their pension pot however they like, subject to their marginal rate of income tax, and will no longer have to buy an annuity. More responsibility, more risk, more help needed.
 
Many investors may still choose to buy an annuity, seeking the peace of mind which comes with a guaranteed amount of income. However, many are likely to seek alternative ways in which to generate an income, and in doing so not forego their capital, as they must when buying an annuity.

A huge opportunity

This represents a great opportunity for fund management companies as they seek to attract investors looking to balance the trade-off between levels of income and risk to capital, or in other words to provide an annuity-type income. For many investors any deal will be better than the total and permanent loss of capital associated with buying an annuity.
 
 
Richard Romer-Lee is managoing director of Square Mile Investment Consulting & Research