First 10 year maturity payout for Foresters Tax Exempt Savings Plan

Thursday, July 11, 2013

Launched in January 2003, Foresters Tax Exempt Savings Plan (TESP) is now paying out on the first 10 year policies to have reached maturity (see table below).  The Foresters TESP provides a tax-free way of saving towards mid to long-term goals and can be held in addition to ISAs.  These products are only offered by friendly societies and can provide investors with an extra £300pa tax-free savings.  Benefits include:

  • Guaranteed return - a guarantee to get back at least what has been paid into the plan, providing contributions are maintained for the full term of the plan;
  • Tax-free cash lump sum - on maturity, under current HMRC guidelines, the policyholder will receive a cash payout free of Capital Gains and Income Tax;
  • The option to save £25 per month with a choice of how long for- a minimum of 10 years up to a maximum of 25 years;
  • Potential for growth - with the addition of annual bonuses and a final bonus (bonuses are not guaranteed). 

An actual example of a £25 per month, Foresters TESP which commenced in 2003 with a 10 year term, providing the equivalent to an average annual return of 3.9%*.
 

Description Rate Amount
Guaranteed Maturity Amount (GMA)   £3,012.00
2004 Annual Bonus 1.75% of GMA and 3.25% of previous bonuses £52.71
2005 Annual Bonus 2.00% of GMA and 3.50% of previous bonuses £62.09
2006 Annual Bonus 2.00% of GMA and 3.50% of previous bonuses £64.26
2007 Annual Bonus 2.00% of GMA and 3.50% of previous bonuses £66.51
2008 Annual Bonus 1.00% of GMA and 2.25% of previous bonuses £35.65
2009 Annual Bonus 0.50% of GMA and 1.00% of previous bonuses £17.88
2010 Annual Bonus 0.25% of GMA and 0.75% of previous bonuses £9.78
2011 Annual Bonus 0.25% of GMA and 0.75% of previous bonuses £9.85
2012 Annual Bonus 0.25% of GMA and 0.75% of previous bonuses £9.93
Interim Bonus in respect on 2013 0.25% of GMA and 0.75% of previous bonuses £10.00
Final Bonus 9% of GMA and 9% of previous bonuses £301.56
Total Maturity Value   £3,652.22

 

Neil Armitage, Marketing Director at Foresters said: "Mutual organisations, like Foresters, can help advisers expand their product offering.  As consumers become more risk averse, we believe the tax-free savings combined with the underlying guarantees offered by TESPs will become increasingly attractive.  As a mutual, our aim is to provide a range of easily accessible, relevant and affordable financial products and the addition of our member benefits package really helps to differentiate our proposition."

Membership benefits are not regulated.


*The final bonus rate is based on the year of the policy commencement and can change at any time.  Past performance should not be seen as a guide to future performance and the addition of annual and final bonuses is not guaranteed.

If a policy was taken out before 1st April 2011 it would have a guaranteed maturity amount of £3,012 as shown in the example.  Following a re-price, all policies taken out after 2011 have a guaranteed maturity amount of £3,000 however they attract a different bonus series which will aim to mitigate against the slightly lower guaranteed maturity amount.