If investors last that long, they will also get a 20 per cent "loyalty bonus".
Plus points: The product gets around a Revenue rule on what you can invest in under a PEP. Normally, investors can put pounds 6,000 in UK or European securities approved by the Inland Revenue. A further pounds 3,000 can be put into a PEP - but only if it is invested in a single company.
HSBC gets around this by investing in a company listed in Dublin which can further invest the money, spreading the risk between hundreds of companies. The product gives a greater level of security and can accept money transferred from other PEPs and from windfall shares.
Drawbacks and risks: No one knows what the Government is going to do about PEPs. They are expected to be replaced in April 1999 by an "individual savings account". But it is not clear whether PEPs will retain tax reliefs or be transferable into the new accounts.
Verdict: Don Clark, managing director of PEP specialists Torquil Clark, believes there is a risk the Inland Revenue may see this sort of Dublin- based PEP as a cheat and refuse to allow tax-free payouts, although the strategy has been used before. A good product, but it carries an extra risk as a result.
Marks out of five: Three - or one, if the Revenue cracks down on the product.
-Andrew VerityReuse content