Savers 'can pick up 14% returns with PLAs'

Monday, June 14th 2010

Purchased life annuities (PLAs) could be one way in which those trying to save money can earn a high interest rate.

The Bank of England last week decided to keep the base rate at 0.5 per cent for the 15th consecutive month, meaning that savers will be struggling to find products with a beneficial rate of interest.

According to This Is Money, handing over capital in return for a monthly income under a PLA is one option for those looking for good returns on their investment.

Although the money cannot be recovered like a normal savings account, interest of up to 14 per cent can be enjoyed.

"Buyers also gain from the unique tax rules surrounding a PLA. Part of the regular payment is treated not as income, but as a return of the buyer's capital," the publication noted.

The Bank of England's Monetary Policy Committee also voted to maintain the stock of asset purchases at £200 billion.