Children's Savings Plan

The Tax Exempt Savings Plan 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
• 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)

The Tax Exempt Savings Plan 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.

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.

At the end of the 10 year term, your child / grandchild will receive their 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 investment performance and annual valuation.

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

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.

These figures are only examples and are not guaranteed – they are not minimum or maximum amounts. What the child will receive depends on how your investment grows. They 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 the child could buy in the future with the amounts shown.

In the tragic event of the child dying  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.