What is the Ethical Child Savings Plan?

The Ethical Child Savings Plan is a tax-free savings plan. The money you save is invested exclusively in the ethical section of our Order Insurance With Profits Fund where we aim not to invest in any company believed to be harmful to people, animals or the environment. Foresters Friendly automatically rules out businesses involved in arms manufacture, tobacco, pornography, animal testing or gambling.

How old does the child need to be to receive their cash lump sum?

The child must be at least 16 years of age to receive the proceeds of the plan. 

Do I need to get the child's parents' permission?

As part of the application process, we will ask you to confirm that the child's parents agree to you setting up the plan. We are required to send them a copy of the policy documentation, so we will also ask you to provide their details as part of the application process.

Are there any charges?

As with any investment, there are costs in running the fund including the costs of buying and selling assets. We deduct charges before we declare bonuses meaning that there are no additional charges for you to pay. For more information about charges, see the Ethical Child Savings Plan Key Features Document.

What's the difference between an Ethical Child Savings Plan and a Child Tax Exempt Savings Plan?

We invest Ethical Child Savings Plan contributions solely in the ethical section of our Order Insurance With Profits Fund.

The Ethical Child Savings Plan invests less in guaranteed investments and more in higher risk investments. This means that, while it cannot guarantee that your child receives what you pay in, there is the potential for a higher rate of return over the long-term than the Child Tax Exempt Savings Plan offers. There is a possibility that a child may not get back what is saved over the term of the policy.

How do I choose the right plan?

You should consider your ability to make payments throughout the term of any plan. You may also wish to think about your attitude to risk and the Product Performance when considering a plan.

I'm not sure if the Ethical Child Savings Plan is right for me. What should I do?

If you're unsure as to the suitability of this product you should seek advice from an Independent Financial Adviser. You may have to pay for this advice.

What is the minimum payment?

The minimum payment is £15 per month if you apply online, or £25 per month if you apply by post.

What is the maximum payment?

To benefit from tax exemption under current legislation, the maximum level of total contributions per child per month is £25.

Can I choose how much I pay?

If you apply for our Ethical Child Savings Plan online you can choose a monthly contribution of between £15 and £25. If you apply by post the monthly premium is fixed at £25. We will collect your payments by Direct Debit from your bank.

How do I pay?

Payments are by Direct Debit - which is why we'll ask you to provide your bank details when you apply.

What am I committing to?

Once you select the term, which can be from 10 to 25 years, you must make payments throughout the term to ensure the child benefits from the tax-exempt pay-out.

Can other people - such as the child's parents pay in?

The plan is based on one agreement. Given the minimum payment amounts, it isn't possible for more than one person to be paying into the plan.

Can I stop and re-start the payments?

The Ethical Child Savings Plan is designed to be a medium to long-term regular fixed commitment.

What happens if I stop paying?

If you stop making your payments, especially in the early years, the child is unlikely to receive as much as you have paid in. If you stop paying in the first year, the plan will lapse with no value.

What happens if I, or the child, die?

If the child dies, a benefit equating to a refund of contributions paid to date will be payable to the child's estate. If you die while paying contributions on behalf of a child, someone else may continue to pay the contributions.

How much could my child expect to receive?

The amount received is made up of a guaranteed minimum amount plus any bonuses which have been added during the term and a potential final bonus. The addition of bonuses is not guaranteed.  You can request an information pack including a personal illustration.

Where is the money invested?

Any money paid into the Ethical Child Savings Plan is invested in the Ethical section of Foresters Friendly Society's Order Insurance With Profits Fund. Here, we manage your money, alongside other ethical investors' money. We spread all the money paid into the fund across a number of different types of assets that may include stocks & shares and cash. If the return from any one particular asset type is poor, the fund may be protected from the full impact of this fall as other assets forming part of the overall investment may perform better.

What interest does the plan pay?

The Ethical Child Savings Plan does not pay interest. Instead, the ethical section of the Order Insurance With Profits Fund provides your plan with the potential for growth, by way of bonuses.  What a child receives depends on the performance of the ethical section of our With Profits Fund. The fund performance and the addition of bonuses cannot be guaranteed.

How do bonuses work?

At the end of each year, we aim to declare an annual bonus, based on how the fund performs and the costs incurred. In addition, when the Ethical Child Savings Plan matures, Foresters Friendly may add a final bonus based on the overall investment growth achieved and expenses incurred. Although in some investment conditions the growth in the Ethical Child Savings Plan might not be as much as that on an interest-paying account, investing in this way means there is the potential for growth over and above the level which might be achieved on interest-paying accounts.

Would a child really be paying tax on an account?

It's worth bearing in mind when looking at savings options that a young adult may be earning and paying tax when the plan matures. Our children's savings plans ensure that, even beyond 16, the child is exempt from tax on the lump sum pay-out.

Under current legislation, each person (including children) can save up to £25 a month in a Friendly Society Tax Exempt Savings Plan, which includes our Ethical Child Savings Plan. Any premiums above these limits can be invested in the Society's other savings plans.

There's a common myth that children don't pay tax - that's simply not true. In fact, children are taxed in the same way as adults. Each child can, in the 2012-13 tax year, benefit from up to £8,105 tax-free income.

Most children don't use up their allowance, so their savings interest is tax-free. But there's also the proviso that any interest earned on money specifically given to them by a parent is only tax-free up to £100 interest a year, per parent or step-parent, beyond which all interest is taxed at the parent's rate.  Please be aware that tax rules might change and depend on individual circumstances.

Who is Foresters Friendly Society?

Foresters Friendly are a mutual society, founded in 1834 by ordinary people with a common purpose - to support each other through financial and other difficulties.

We've been looking after our members, and their finances, for over 175 years, offering care and protection through relevant affordable financial products. 

Since 1834 our aim has been to be open, approachable, honest and fair, treating all our members as individuals.

We always put the interests of our members first.

How safe is my money?

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.  You'll be pleased to hear that our funds have grown steadily over the years and our financial position remains strong.  (Source:  Reports & Accounts 2010)

What is a Friendly Society?

Friendly Societies have been around for hundreds of years. They were founded on the idea of mutuality - that if a group of people contributed to a mutual fund, an individual within the group could benefit in a time of need. The principles still apply - friendly societies are owned by, and operate in the interests of, their members. Unlike public limited companies, they use revenues to the benefit of their members rather than distributing profits to their shareholders.

How do Friendlies perform, compared to PLCs?

Research shows that, in 2009, PLC insurers paid out on average 3p to shareholders for every £1 invested by their customers. With no shareholders to answer to, mutual societies can ensure their profits are only used for their members benefits by sharing this amongst members, or re-investing to provide better returns, better value or higher levels of service.

(Source: Association of Financial Mutuals)

What is a Mutual?

UK financial organisations are all authorised by the Financial Services Authority (FSA) and are either mutuals or public limited companies (PLCs). Unlike a PLC, a mutual organisation has no external shareholders to pay in the form of dividends and does not seek to make large profits or capital growth. 

Mutual organisations are owned and run for the benefit of its members and their profits are usually re-invested for the benefits of members, although some may be used for internal finance to ensure the mutual is sustainable, safe and secure.

Today, UK mutuals account for £90 billion in revenue every year and affect the lives of more than one in every three UK citizens. (Source: Association of Financial Mutuals)

I read somewhere about benefits - but I imagine I pay for those somewhere?

When you take out one of our policies or plans, you automatically become a member of Foresters. As a mutual, we don't have to answer to external shareholders. Instead, we use all our profits to benefit our members. All Foresters customers can take advantage of Foresters Extras, a range of benefits we offer at no additional cost.

Do I get any additional benefits as a Foresters customer?

All our customers benefit from Foresters Extras, a range of benefits we offer at no additional cost.

Where can I get help?

For help and support, please contact Foresters Friendly Society.