Tax Exempt Savings Plan

The Tax Exempt Savings Plan (With or Without Life Cover) is a 10 year with-profits endowment policy, which meets HMRC requirements to be exempt from tax. The Plan provides:

• A guaranteed minimum return as long as the Plan is paid in full to the end of the 10 year term
• Life cover – this is an amount paid if you die before the end of the Plan term (With Life Cover plan only)
• Investment into a tax exempt fund (Note that the Fund pays the tax credit on dividends received which cannot be reclaimed)
• Bonuses which once added also become guaranteed
• Tax-free payment at maturity (or on death during the term)

WITHOUT LIFE COVER

If you die during the term of the policy we will refund all premiums paid to the date of death, plus interest at the Bank of England base rate, or the value that would have been payable on surrender, if greater.

WITH LIFE COVER

As long as you have paid all your premiums to date, the plan includes a guaranteed sum assured, which will be paid, together with any declared bonuses, if you die before the end of the 10 year term. There may also be a terminal bonus.

The Tax Exempt Savings Plan (With Life Cover) is available to anyone less than age 60, including children.

HMRC has set maximum premiums that can be paid each year into friendly society tax exempt plans.

You must choose a premium to pay for the whole term of the policy, with a minimum of £9 monthly or£100 yearly, and a maximum of £25 monthly or £270 yearly.

The list of premiums available is shown in the table above. Please note that if you are between 50 and 60 years old at the start of the policy, the minimum premium is £18.50 monthly or £200 yearly.

Premiums are paid by monthly or annual standing order, or by sending a cheque.

The policy is for a fixed term of 10 years. No part withdrawals can be made and the premium amount and term cannot be altered. You can stop paying premiums and surrender the Plan, but:

• You will lose the benefit of the guaranteed minimum return and the life cover.
• You may get back less than the amount you have paid, particularly in the early years.
• If you surrender the Plan in the first year you will get nothing back.
• If you miss a premium you will be allowed 30 days to pay it, after which the policy will be closed and if you are entitled to a surrender value this will be paid to you.

Your money goes into our With Profits Fund and the underlying assets are currently invested in Freehold Property, Equities, Corporate Bonds, British Government Securities and Cash.

The charges are not fixed and depend on the expenses incurred by the Society, but the Society expects to take 60% of the first year’s premium and 4% of each subsequent year’s premium to cover the initial set up and on-going costs of administration and surrender expenses, and an additional charge for providing the life cover. These charges are taken into account when declaring bonuses and are not paid separately by you. The table below provides examples of the effect of the charges on the possible surrender and maturity amounts. This example applies to all ages for which the Plan is available. The premium used is £18.50 per month.

If you survive to the end of the 10 year term, you will receive your maturity value. This comprises the initial guaranteed sum assured plus any annual bonuses that have been declared during the term. There may also be a terminal bonus. Bonuses will be declared on a basis recommended by the Actuary, as a result of the Society’s investment performance and annual valuation.

The figures below show what maturity value you might receive at the end of the term, taking into account the guaranteed sum assured.

WITHOUT LIFE COVER
If investments grew at 2% a year you would get back £2,230.
If investments grew at 5% a year you would get back £2,550.
If investments grew at 8% a year you would get back £2,950.

WITH LIFE COVER
If investments grew at 2% a year you would get back £2,160.
If investments grew at 5% a year you would get back £2,490.
If investments grew at 8% a year you would get back £2,910.

These figures are only examples and are not guaranteed – they are not minimum or maximum amounts. What you receive depends on how your investment grows. You could get back less or more than this.

The rates of growth used in these examples are the standard rates as prescribed by the Financial Conduct Authority for this type of investment.

Don’t forget that inflation would reduce what you could buy in the future with the amounts shown.

The table below shows the impact that charges have on the policy proceeds.

WITHOUT LIFE COVER

WITH LIFE COVER

The deductions include the cost of life cover (where applicable), expenses, charges and any surrender penalties and other adjustments. The last line shows that over the full term the effects of the total deductions could amount to £377.

Putting it another way, if the growth rate was 5.00% a year, which is in no way guaranteed, this would have the effect of reducing it to 2.26% a year.

If you are a member of a lodge your Lodge Secretary will receive a one-off payment of £2 after this policy has been in force for one full year. This is paid from the deductions included in the above example. We do not pay commission to any other third parties.

Starting a Tax Exempt Savings Plan is simple. Once you have read and understood these ‘Key Features’:

• Decide how much you want to save each month or year.
• Complete the Application Form.
• Complete the standing order form if you want to use this method of payment.
• Post your application / standing order forms to us.
• You will need to provide us with proof of your identity and address (eg passport & recent utility bill). Please see the Proof of Identity list on the website or contact us for further details.