Child Tax Exempt Savings Plan. A helping hand for their future

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1 Child Tax Exempt Savings Plan A helping hand for their future

2 Welcome to Foresters Friendly Society, where we work hard to make personal finances easy to understand and treat all our members as part of the extended family. Our Child Tax Exempt Savings Plan is a great way to give your child a helping hand in life. You can choose how much you want to pay into it, and for how long as well. You can even choose a special date for your child to receive their tax free sum.! Please have a read through this brochure, which explains how the savings plan works, and don t hesitate to get in touch if you have any questions. We ve also included an application form, so when you re ready you can fill it in and send it back to us.

3 Child Tax Exempt Savings Plan So how does it all work? A Affordable monthly savings Saving for your child s future doesn t have to cost much. You can save 25 a month if you apply using the application form in this pack or choose to save from 15 to 25 if you apply online. You can take out a plan for your child from the moment they are born until their 16 th birthday. Please don t stop making contributions in the first year, as this means the plan will lapse with no value and we won t be able to refund your money. B Choose how long to save You can choose how long you want to make payments into the plan any period between 10 and 25 years. The length of time you choose to save for is called the term of your plan. Your decision on how long you want to pay into the plan will determine when the plan will mature for your child this can be any time after their 16th birthday and after a minimum of 10 years. You can even select the exact date for them to receive the proceeds of their plan, for example a special birthday. When the plan matures, your child will receive their tax free sum. The Child Tax Exempt Savings Plan is not suitable as a short-term savings plan. It s important you continue to make payments into your plan for the agreed period. If you don t make all the payments your child could lose the tax benefits of the plan and end up having to pay tax on any gains, and they could lose some or all of the contributions made.

4 C Guaranteed cash sum Your child will receive a guaranteed cash sum when the plan matures which will be at least what you have paid in. You must maintain your monthly contributions for the full term for this guarantee to apply. Please remember that inflation will affect what your child can buy with the proceeds of the plan. In the unlikely event that we could not honour the guarantee (i.e. if we were declared insolvent), you may be entitled to make a claim on the Financial Services Compensation Scheme. D The potential for growth All the monies paid into our Child Tax Exempt Savings Plan go into our Order Insurance Fund. This is a with profits fund which is invested across a balanced mix of assets to help minimise risk. We then aim to use any profits generated to add an annual bonus to the guaranteed cash sum (as detailed in the section above) and possibly a final bonus to be paid when the plan matures. In good years, we may hold back some of the return and use it to top up bonuses in years when the fund performs less well. The addition of bonuses is not guaranteed so your plan may not receive an annual or final bonus. Bonuses will depend on the future performance of the Order Insurance Fund and how we decide to distribute any profit. Please refer to the Key Features section later in this brochure for further information on how our Order Insurance Fund works.

5 I chose the CTESP for my daughter, Ruby, because it s an affordable amount to save for her each month with excellent member benefits in addition to the policy. I love the fact that I was able to choose how long I wanted to save for and I ve chosen to give her a special gift on her 21st. Ruby s mum, who works for Foresters Friendly Society

6 E Tax free A great thing about this type of savings plan is that the final payment your child receives will be free of Capital Gains Tax and Income Tax. Only a Friendly Society can give you the additional tax advantages through this type of regular premium savings plan, under which we don t have to pay tax on the investments in the fund. Like NISAs tax is automatically deducted from UK share dividends. You need to be aware that only your child will have access to the funds in the plan. If you cash in the plan before it has run at least three quarters of its term, (or ten years if this is a shorter term), the amount paid out may no longer be tax free. You should also be aware that tax rules might change in the future and depend on individual circumstances. They re the most important thing in your world. They make you laugh, they make you cry. And thinking about the future in front of them fills you with excitement. Whether it s the anticipation of their first car, or planning for university, it s brilliant to be able to give a helping hand, as well as a guiding hand. Because it s what friends do.

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8 Your child will have access to loads of unique extras By taking out a Child Tax Exempt Savings Plan, your child automatically becomes a Foresters member. And although they may not take advantage straight away, they ll have access to a range of brilliant extras that can give them support and assistance when they need it. 1 Financial grants for education We offer a number of discretionary financial grants to support our members with things like higher education. 2 Foresters Care Practical help and emotional support from a personal nurse adviser is available for any member with a serious health condition. 3 Financial support Discretionary grants are available for members to help with support during difficult times. The membership benefits we provide aren t regulated and are regularly reviewed by us to ensure they are relevant to our members. You have made a massive difference to me and my family. A satisfied Foresters member, 2016

9 Why choose us? We ve been looking after our members, and their finances, for over 180 years. Since 1834 our aim has been to be open, approachable, honest and fair, treating all our members as individuals. Offering care and protection through relevant, affordable financial products, we always put the interests of our members first. Being a mutual society means we have no shareholders, so all our profits are shared amongst our members through our bonus scheme and benefits package. 97% customer satisfaction 2016 Member Satisfaction Survey Over 1 million in discretionary financial grants paid out in 2015 Over 180 years experience Approx 80,000 members Financially strong, we manage funds of 264 million on policyholders behalf Get access to a range of member benefits

10 The savings plan s key features Important info you need to read Before applying for the Child Tax Exempt Savings Plan, please read the Key Features, which you ll find on the next few pages. The Key Features explain how the plan works, its aims, terms and conditions and will help you decide if it s suitable for you. It also includes information on bonuses and how we aim to grow your money. This section is full of really important information and will hopefully answer any questions you might have.

11 The Key Features of the Child Tax Exempt Savings Plan The Financial Conduct Authority (FCA) is a financial services regulator. It requires us, Foresters Friendly Society, to give you this important information to help you to decide whether our Child Tax Exempt Savings Plan is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference. Its aims Providing all the contributions are paid throughout the term, a Foresters Friendly Society Child Tax Exempt Savings Plan (Child TESP) aims to provide the child with: A guaranteed tax free cash sum on maturity. Potential for additional tax free bonuses to be added to the guaranteed cash sum on a yearly basis, with a possible additional bonus being paid at maturity. Your commitment You agree to pay a regular monthly contribution on behalf of the child throughout the term. The Child TESP is unsuitable as a short term investment. Current legislation states that the total amount that can be contributed in to all Friendly Society Tax Exempt Savings Plan(s) cannot exceed 25 per month per child. Your contribution is 25 a month (from 15 if you apply online) for the agreed term (minimum of 10 years, maximum of 25). Risks Bonuses will depend on the future investment performance of the Order Insurance Fund, as well as any deductions and how Foresters Friendly Society decide to distribute any profit. The addition of bonuses is not guaranteed and therefore it is possible that the Child TESP might not receive any annual and/or final bonus Legislation may change, to affect the tax status of this plan. Your circumstances may change forcing you to stop making contributions. If you stop making contributions in the first year the plan will lapse with no value. You will not be able to get your contributions back. After the first year, if the plan is cashed in or you stop paying contributions, the child may get back less than you have paid in. Any payments made due to the surrender or cashing in of this plan will be paid out in the child s name, as this plan is for the sole benefit of the child. If you do not maintain contributions for the chosen period the child could be liable to tax on any gains made on the investment. Our deductions may turn out to be higher than expected. You should be aware that inflation will reduce what the child can buy in the future with the cash sum. All money paid into the plan immediately becomes the child s and contributions should be seen as a gift to the child. Once paid they cannot be returned to the person who paid them. Your Questions Answered What is the Child Tax Exempt Savings Plan? The plan is a tax free savings plan. The money that you invest in this plan is invested in a fund which is free of tax on both income and capital gains, although dividends earned on equities within the fund will have been taxed at source and cannot be reclaimed. It pays a guaranteed cash sum at the end of the term, which can be on a child s specific birthday. For a child under 6, the plan will mature on or after the child s 16th birthday, otherwise the minimum term must be 10 years. Where is the money invested? Any money paid into the Child TESP is invested in Foresters Friendly Society s with profits Order Insurance Fund. By spreading the money paid into the fund across a number of different types of investments you benefit from the exposure to a range of asset classes which may include equities (company shares), fixed interest bonds (government and company), property and cash. A further advantage of this approach is that if the return of any one particular asset type is poor, the child s investment may be protected from the full impact of this fall as the other assets forming part of the overall investment may perform better. Thus the fall in value in one asset class (e.g. shares) may be cushioned by the potential better performance in another asset class (e.g. property). How are bonuses decided? Depending on how the underlying assets in the fund perform, and the costs incurred, we aim to declare an annual bonus. In addition, when the Child TESP matures we may add a final bonus depending on the overall investment growth that has been achieved and expenses incurred. This is different from a Bank or Building Society account where your savings can grow as a result of the interest rate on the account. Bonuses are added as the result of the growth performance of the underlying fund. Although in some investment conditions the growth in the Child TESP might not be as great as that on an interest paying Bank or Building Society account, investing in this way means that there is the potential for growth over and above the level which might be achieved on interest paying accounts. How will it work? Within this Key Features document you will find a typical illustration showing example figures on how the plan might work for a child.

12 Will the plan work out exactly as in the personal illustration? Providing you maintain the agreed levels of contributions, at maturity the child will receive at least the guaranteed cash sum based on the amount you wish to save and the term you have chosen. Any additional benefits will depend on the bonuses, if any, added to the plan which will vary. What happens if contributions stop? In the first year the plan will lapse with no value. If contributions aren t paid, they can be restarted as long as this is done within 13 months of the first missed contribution. All the missed contributions must be paid. After one year you can apply for the plan to be made a paid-up plan. This means that the guaranteed cash sum will be reduced as determined by the Foresters Friendly Society Actuary. Money paid out from a plan which has been paid-up may be taxable depending upon when the contributions stopped. Bonuses may continue to be added, but will be calculated according to the reduced cash sum. Once a plan has been made paid-up it cannot be reinstated. After one year you can cash in the plan but the child may not get back as much as you have paid in. What might the child get back? The figures below compare potential maturity payouts at three different growth rates for a Child TESP for 25 per month for 15 years, which apply no matter how old the child is. You will receive a specific illustration when you receive your plan documents. An example: Term 15 years. Monthly contribution: 25 Guaranteed cash sum: 4,500 If investments grew at 2% a year the child might get back 4,500 If investments grew at 5% a year the child might get back 5,330 If investments grew at 8% a year the child might get back 6,630 These figures are only examples and are not guaranteed. They are not minimum or maximum amounts. What the child could get back depends on the length of the investment, how the investment grows and its tax treatment. The child could get back more or less than this. The guarantee is that, subject to scheduled contributions being paid when due, at maturity the child will not get back less than the guaranteed cash sum which will be at least the sum of contributions. The yearly growth rates are our reasonable estimate of what the investment returns could be but are subject to the maximum rates specified by the Financial Conduct Authority. Do not forget that inflation would reduce what the child could buy in the future with the amounts shown. What happens if the plan is cashed in early? The child cannot cash in this plan until they reach the age of 16. A parent or guardian can apply for the surrender or cashing in of the plan at any time until the child reaches 16. The sum due on surrender will be paid out in the child s name at all times, as the plan is for the sole benefit of the child. If cashed in, the child could get back less than you paid in. The figures below are based on savings of 25 a month for 15 years. The last two columns assume that investments will grow at 5.0% a year. The early years At end of year The later years Total paid in to date What charges are made for the Child Tax Exempt Savings Plan? We make annual charges against the total fund which are deducted before bonuses are declared. These charges are illustrated under the Effect of deductions to date. What are the deductions for? Effect of deductions to date The deductions include the cost of expenses, charges, any surrender penalties and other adjustments. The charges, expenses and other deductions used in this guide are best estimates based on current experience. They could vary in the future. The bottom line in the table shows that over the full term of the plan the effect of the total deductions could amount to 1,310. Putting it another way, this would have the same effect as bringing investment growth from 5.0% a year to 2.2% a year. What happens if I or the child dies? What you might get back , , ,240 At end of year Total paid in to date Effect of deductions to date What you might get back 10 3, , ,500 1,310 5,330 In the event of the child s death before the maturity of the plan, the Society shall return all contributions paid to the child s parent/guardian. This plan does not protect against the financial consequences of death. If you die whilst you are paying contributions on behalf of a child, the plan can continue as long as contributions are paid by someone else.

13 Further Information Cancellation rights After your application is accepted you will receive a statutory notice of your right to cancel. You will then have 30 days from the commencement date of the plan, or the date the notice is received whichever is later, in which to change your mind. If you choose to change your mind a full refund of all monies will be paid. You can do this by completing and returning the cancellation form to us at Foresters Friendly Society, Foresters House, Shirley Road, Southampton SO15 3EW. Financial advice We do not offer financial advice. You should contact a Financial Adviser if you have any doubts about this plan s suitability. You may have to pay a fee for this advice. Contributions Contributions are paid monthly by Direct Debit. Tax The fund is free of tax on both Income and Capital Gains except for tax deducted from dividend income which cannot be reclaimed. If you do not continue to pay the contributions to the end of the term the named child could be liable to tax. Do remember that tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Qualifying policies A qualifying policy is a life insurance policy which meets HM Revenue and Customs rules. Subject to certain conditions, the proceeds of these policies are paid to an individual free of income and capital gains tax. Such policies are regular contribution policies and have a minimum policy term of ten years. There is an annual contribution limit for qualifying policies of 3,600 per individual. This limit applies to policies where the child is the beneficial owner i.e. the person who the proceeds belong to, usually the policyholder. If the child is a beneficiary of a policy written in trust, then they are also the beneficial owner. Policies which only provide a pay-out on death are not included within the annual limit. Law This contract is governed by English Law. We will communicate with you in English. Legislation All or any of the benefits, the contribution or the Plan Conditions may be adjusted as deemed appropriate: If there is any change in law or taxation affecting the plan. If any levy is imposed on Foresters Friendly Society under statute or statutory authority. Three months notice would be given of any such adjustment. Queries and complaints For further information or queries on Foresters Friendly Society products or services please contact the Member Services Department, by tel: , memberservices@forestersfriendlysociety.co.uk or at the address at the back of this document. If you wish to complain about any aspect of the service you have received, please contact Foresters Friendly Society. If a complaint is not dealt with to your satisfaction you can then complain to the Financial Ombudsman Service, Exchange Tower, Harbour Exchange Square, London E14 9SR. Tel: , complaint.info@financial-ombudsman.org.uk. Making a complaint will not prejudice your right to take legal proceedings. Compensation The Financial Services Compensation Scheme (FSCS) covers this plan. You may qualify for compensation from the Scheme if we are unable to meet our obligations. You can get further information from us or from the FSCS ( Client categorisation We are required under the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) rules to categorise our clients. All of our clients are categorised as Retail Clients, which affords our clients the highest level of protection under the FCA and PRA rules. The Child Tax Exempt Savings Plan is classed as a qualifying policy. You must ensure that the 3,600 limit per child is not exceeded in any one year. If, for example you take out a plan for 25 a month, this will total 300 per year which will count towards your child s 3,600 limit. Paid-up values If you stop paying contributions after one year you can make the plan paid-up. The guaranteed cash sum will be reduced. Bonuses may continue to be added, but will be calculated according to this reduced paid-up value.

14 Apply now and give your child a helping hand You ve read about how the Child Tax Exempt Savings Plan is a great way to give your child a head start in life. Why not apply now while it s fresh in your mind? You ll find an application form attached. Simply fill in your details and return it to us by post using the freepost address below. There s no need for a stamp. Alternatively you can apply online at Send your completed application form to: Foresters Friendly Society FREEPOST RLST-SJZE-BACC Shirley Road Southampton SO15 3EW Telephone: Visit: memberservices@forestersfriendlysociety.co.uk The Direct Debit Guarantee (please retain this Guarantee for your records) This Guarantee is offered by all banks and building societies that accept instructions to pay Direct Debits. If there are any changes to the amount, date or frequency of your Direct Debit Foresters Friendly Society will notify you 10 working days in advance of your account being debited or as otherwise agreed. If you request Foresters Friendly Society to collect a payment, confirmation of the amount and date will be given to you at the time of the request. If an error is made in the payment of your Direct Debit by Foresters Friendly Society or your bank or building society you are entitled to a full and immediate refund of the amount paid from your bank or building society. If you receive a refund you are not entitled to, you must pay it back when Foresters Friendly Society asks you to. You can cancel a Direct Debit at any time by simply contacting your bank or building society. Written notification may be required. Please also notify us.

15 Child Tax Exempt Savings Plan Application Form Please read the Key Features before completing this form. Please return your completed form to Foresters Friendly Society to proceed with your application. If the child has any Tax Exempt Savings Plans (excluding Junior ISAs or Child Trust Funds) with this or any other Friendly Society, the total amount that can be invested on their behalf cannot exceed 25 per month. FOR OFFICE USE ONLY Staff/FA/Int Name Contact/FA/Int Number Marketing Code 1. Your details 2. Child s details This Child Tax Exempt Savings Plan is a gift from: Title Mr Mrs Miss Ms Other First name Middle name(s) Last name Date of birth D D M M Y Y Y Y Address This Child Tax Exempt Savings Plan is a gift for: Title Child s first name Middle name(s) Last name Date of birth D D M M Y Y Y Y Address (if different from yours) Postcode Home telephone Mobile telephone Postcode If relevant, preferred branch no. Relationship to named child 3. Regular contributions (how long do you want to save?) The contribution level required for this Plan is 25 per month (from 15 if you apply online). For how long do you want to save? EITHER: Until the child reaches a special birthday. Please enter the child s birthday e.g. 18th. (Minimum 10 years from now) OR: For a specified number of years. Please enter the number of years e.g. 10. (Max. 25 years, min. 10 years). Note that in either case this cannot be before the child s 16th birthday.

16 Child Tax Exempt Savings Plan 4. Parent/Guardian details (if not the person setting up the plan) Title Mr Mrs Miss Ms Other First name Middle name(s) Last name Date of birth D D M M Y Y Y Y Address Postcode Telephone 5. How we will use your data The information that you provide on this form will be held by Foresters Friendly Society and used to set up and administer the policy for which you are applying and for other business purposes. Further information about how we hold and use your personal information is available on our website ( Where an application is made via a Financial Adviser (FA), you agree to your details being disclosed to that FA until you instruct us otherwise. We (Foresters Friendly Society, including your Branch) would like to provide you with marketing communications about products, services and events which may be of interest to you by post, and phone. By providing your details, you indicate your consent to receiving such communications from us. If you do not want to receive these communications, please tick the relevant box(es) below: I do NOT wish to receive these communications from you by: post phone We would also like to share your personal information with third parties who provide complimentary financial products and services to our own so that they can provide you with marketing communications about products and services which may be of interest to you by post, and phone. By providing your details, you indicate your consent to receiving such communications from those third parties. If you do not want to receive these communications, please tick the relevant box(es) below: I do NOT wish to receive these communications from third parties by: post phone 6. Declaration This is our standard client agreement upon which we intend to rely. For your own benefit and protection you should read these terms carefully before signing them. If you do not understand any point please ask for further information. I wish to apply for the Foresters Child Tax Exempt Savings Plan I have read and understood the Key Features, and in applying for this plan, I declare that to the best of my knowledge and belief, the above statements are true and complete. I confirm that the child does not currently hold a Friendly Society Tax Exempt Savings Plan with combined contributions (including that of this policy) in excess of 25 per month. I understand that all correspondence relating to the plan will be sent to the child s Parent/Guardian until the child s 16th birthday, and will be sent to the child after their 16th birthday. I understand that the child will be entitled to Foresters Friendly Society surplus in the event of the closure of the Society only after having been a member for 5 years. I understand that a copy of the Rules and Memorandum are available upon request. In cases where you are not the child s Parent/Guardian: I confirm that the child s Parent/Guardian consents to me setting up this savings account. I confirm that I have not been given advice by Foresters Friendly Society in relation to the purchase of this plan. Signature Date

17 Child Tax Exempt Savings Plan 7. Instruction to your Bank or Building Society to pay by Direct Debit To The Manager Name and full address of your Bank/Building Society branch. Sort Code - - Account number Originator s Identification Number Reference Number (office use only) Instruction to your Bank or Building Society Please pay Foresters Friendly Society Direct Debits from the account detailed in this Instruction subject to the safeguards assured by the Direct Debit Guarantee. I understand that this Instruction may remain with Foresters Friendly Society and, if so, details will be passed electronically to my Bank/Building Society. Name(s) of Account Holder(s) Signature Date Signature Date Banks/Building Societies may decline to accept instructions to pay Direct Debits from some types of account, such as a savings account. 8. The Direct Debit Guarantee This Guarantee is offered by all banks and building societies that accept instructions to pay Direct Debits. If there are any changes to the amount, date or frequency of your Direct Debit Foresters Friendly Society will notify you 10 working days in advance of your account being debited or as otherwise agreed. If you request Foresters Friendly Society to collect a payment, confirmation of the amount and date will be given to you at the time of the request. If an error is made in the payment of your Direct Debit by Foresters Friendly Society or your bank or building society you are entitled to a full and immediate refund of the amount paid from your bank or building society. If you receive a refund you are not entitled to, you must pay it back when Foresters Friendly Society asks you to. You can cancel a Direct Debit at any time by simply contacting your bank or building society. Written notification may be required. Please also notify us.

18 Apply now to support your child s future Send your completed application form to: Foresters Friendly Society FREEPOST RLST-SJZE-BACC Shirley Road Southampton SO15 3EW Telephone: Visit: memberservices@forestersfriendlysociety.co.uk Monday - Friday, 9am - 5pm (excluding Bank Holidays) Information, including a copy of this document, is available in large print, audio and Braille upon request. Foresters Friendly Society is the trading name of The Ancient Order of Foresters Friendly Society Limited which is an Incorporated Friendly Society (Registration No. 511F) and is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Registration No ). 403/2016/CTESPONE/12/16