Driven by increasing life expectancy rates and record low interest rates, levels of income provided by annuities have plunged over the past couple of decades.


Back in the 1990s a 65 year old man with a pension fund of £100,000 could quite easily secure an income of c.£15,000 a year until death via a life annuity. But in 2016 an equally large pension pot is unlikely to pay our retiree much more than £5,000 per annum.

Investors with a more adventurous appetite for risk and looking to secure higher rates of long-term income might want to turn to the crowdfunding sector.

A range of peer-to-peer and other platforms currently offer a variety of long-term debt products which offer more attractive rates compared to those of annuity providers.

The recently launched Innovative Finance ISA offers the opportunity to further boost returns via its tax free wrapper, should the loans be eligible.

‘a variety of long-term debt products which offer more attractive rates compared to those of annuity providers’

One example is renewable energy company ECH Property Solutions which is currently looking for debt finance on the Crowd for Angels platform.

ECH plans to use the money it raises to buy a portfolio of income generating solar power consumer credit agreements.

The company is seeking up to £205,000 in investment via a 10 year (3,600 days) capital repayment loan at an interest rate of 8%, with repayments being made every 90 days.

The loan is also secured by a fixed charge on the underlying credit agreements.

To illustrate the income on offer, a £10,000 investment in the loan would deliver payments of just under £365 every 90 days (or £1,460 per year) for 10 years.

On capital repayment loans the interest rate stated represents the gross return earned if you immediately re-invest all repayments (interest and principal) received over the course of a year at the same level of interest.

However, with greater potential gain comes increased risk and even an 8% return may not be enough to tempt investors away from the certainty of an income for life; the risk associated with such an investment are amplified if you lend to only a single business.

However, a modest peer-to-peer investment may add some spice as a small part of a diversified portfolio that balances its overall risk profile with, for example, some fixed income investments.


To learn more about the ECG Property Solutions offer, and indeed how the new crop of crowdfunding platforms work, click here

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