Aviva Portfolio bond.

bulltaco

Hi,
My old aunt is moving into a care home and I need to sort out her finances under a POA.
I want to maximise monthly interest to help with the care home fees, she has four pensions which pay most of the fees.
Some bits are straight forward - she has about £60,000 in a savings account which paid only £35 interest last year and about £40,000 in an ISA paying only 1.8%.
She has had an Aviva step down portfolio bond for two years (she's 85, frail and cognitively impaired) and I can't see that this is much good to her, we need interest now, not a lump sum when she's dead. Surrender value is around £30,000.
Can anyone give me a run down on pros and cons of cashing in this bond and putting the money in a savings account or similar please?.

opinions4u

Is this the product?

http://www.aviva.co.uk/investment-bonds/more-about-portfolio-bond/

Does it pay an income?

Could you draw 5% of the value annually to avoid income tax?

The income referred to above isn't income in the sense that earnings and interest are income payments. All withdrawals from your bond are capital payments. Income tax is payable only when a chargeable gain is made, not on the cash withdrawal itself. Please see our guide to Making withdrawals less taxing (PDF 90KB) for further information.

dunstonh

She has had an Aviva step down portfolio bond for two years (she's 85, frail and cognitively impaired) and I can't see that this is much good to her, we need interest now, not a lump sum when she's dead. Surrender value is around £30,000.
Can anyone give me a run down on pros and cons of cashing in this bond and putting the money in a savings account or similar please?.

Its an investment offering a decent range of unit linked funds in all the main investment areas. It's a low cost investment bond. It has the potential to exceed savings rates.

It is outside the means test for benefits (including care costs). As a tax wrapper, its tax handling may be more suitable than other options (it may not be. we dont know enough to say either way).

It has a 5 year step down penalty. So surrendering it after 2 years will likely be a costly mistake.

bulltaco

Thanks guys,
Lots of useful info and food for thought in your replies.
I didn't know that it may be possible to draw "interest"/percentage of value, will check this out.
We have just started looking at auntie's finances and find that she has been spending many happy hours shredding things that would have been very helpful!.
Many thanks again.:)