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Tax Exempt Savings Plan

Save regularly and tax-free for your future with a long-term plan that provides a guaranteed return

Tax Exempt Savings Plan

Frequently Asked Questions

If you have any questions about our long-term Tax Exempt Savings Plan please see the most commonly asked questions below. If you can't find what you're looking for here please contact us.

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About the Tax Exempt Savings Plan

What is the Tax Exempt Savings Plan?

A Tax Exempt Savings Plan is a regular long-term savings plan designed to provide a tax free lump sum for you at the end of your chosen term.

Who is eligible for a Tax Exempt Savings Plan?

Anyone aged between 16 and 80 years old is able to apply for a Tax Exempt Savings Plan. There are also Child Tax Exempt Savings Plans available for children, allowing you to save a tax-free lump sum for your child's future.

When will I receive a pay-out?

The Tax Exempt Savings Plan pays out at the end of the plan's term, for example on a specific birthday, anniversary or retirement or after a fixed number of years that you choose. You select the plan's term when you take it out between 10 and 25 years.

What guarantees do you provide?

The Tax Exempt Savings Plan provides a guaranteed minimum cash amount payable at the end of your chosen term which will not be less than the amount you have paid in. This is subject to all monthly premiums being paid for the full term of the plan.

Can I make withdrawals from my Tax Exempt Savings Plan?

No, Tax Exempt Savings Plans are a fixed term regular saving plan so withdrawals are not possible until the plan matures.

Are there any charges?

As with any investment, there are costs in running the fund in which your contributions will be invested - 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 Tax Exempt Savings Plan Key Features Document.

Can I open more than one Tax Exempt Savings Plan?

As monthly contributions are fixed at £25, which is the maximum allowance for this type of tax free savings plan, you cannot hold more than one plan.

Each person (including children) can save up to a maximum of £25 a month in a Friendly Society tax free regular savings plan, under current legislation.

Finding the right plan for you

How do I choose the right plan?

You should consider your ability to pay contributions over the savings term. 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 Tax Exempt 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 a Financial Adviser. You may have to pay for this advice.

What if I already have a NISA?

A Tax Exempt Savings Plan can be held in addition to any other tax-free plans, such as a NISA.

Payments into the plan

How much can I pay into the plan?

Monthly contributions are fixed at £25.

How do I pay?

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

Can I pay a lump sum into the plan?

It is not possible to make a lump sum payment into the Foresters Tax Exempt Savings Plan.

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 you benefit from the tax free pay-out.

Can I stop and re-start the payments?

No, the Tax Exempt 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, you are 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 die?

If you die, a refund of contributions paid to date will be payable to your estate. This may be subject to inheritance tax.

Can I contribute to my spouse’s Tax Exempt Savings Plan?

Yes, it is possible to contribute to your spouse’s Plan.  A fixed £25 monthly contribution is collected by Direct Debit for the full term of the plan and can be made from a single, joint or third party account.

Returns on the plan

How much could I expect to receive?

The amount received is made up of a guaranteed maturity amount (equal to your contributions made throughout the term of the plan) 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.

Are there any restrictions on what the money can be spent on?

There are no restrictions on what the money from your Tax Exempt Savings Plan can be spent on. You can use your tax free cash lump sum however you wish, be it for a special anniversary, a holiday of a lifetime, an exceptional birthday present, or something to greet your retirement.

Where is the money invested?

Any money paid into the Tax Exempt Savings Plan is invested in our with profits Order Insurance Fund. Here, we manage your money, alongside other investors' money. We spread all the money paid into the fund across a number of different types of assets that may include property, UK government bonds, equities and cash. If the return from any one particular asset type is poor, the investment 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 Tax Exempt Savings Plan does not pay interest. Instead, the with profits Order Insurance Fund provides your plan with the potential for growth by way of bonuses. What you receive depends on the performance of our with profits Order Insurance Fund. The investment performance 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 Tax Exempt Savings Plan matures, Foresters may add a final bonus based on the overall investment growth achieved and expenses incurred.

This is different from a Bank or Building Society account where interest is added, because any growth on the investment with Foresters depends on the performance of the underlying fund.

Although in some investment conditions the growth in the Tax Exempt 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.

The addition of bonuses is not guaranteed and therefore it is possible that your Tax Exempt Savings Plan might not receive any annual and/or final bonus.

What happens when the plan reaches maturity?

A maturity information pack will be sent to you the month before your Tax Exempt Savings Plan is due to mature. This will advise you how much your cash lump sum payment will be and will detail the information we require you to provide so we can transfer the money to you.

Tax and the Plan

What's the tax situation?

Your contributions into this plan are not affected by any other tax-free allowances, such as NISAs.

Under current legislation, each person can save up to £25 a month tax free in a Friendly Society Tax Exempt Savings Plan. Any contributions above these limits can be invested in the Society's other savings plans.

Your tax efficient savings are maximised as you don't need to pay capital gains or income tax on the return from your Tax Exempt Savings Plan.

However, to ensure the tax-efficiency of the plan, you must continue your monthly contributions for your chosen term. If this isn't the case, any gains the plan makes may be subject to tax.

Tax-free means free of tax in your hands however tax is automatically deducted from UK share dividends. Tax rules depend on individual circumstances and may change in the future.

What is the difference between tax free and tax exempt?

Tax free and tax exempt have the same meaning within this context.

About Foresters Friendly Society

Who is Foresters Friendly Society?

Foresters Friendly Society is 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 180 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?

You'll be pleased to hear that our funds have grown steadily over the years and our financial position remains strong. (Source: Reports & Accounts 2015). However, note that past performance is not a guide to the future.

However, if in the unlikely event that Foresters Friendly Society were to be declared insolvent, you would be able to make a claim under the Financial Services Compensation Scheme.

About Friendly Societies

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 Mutuals perform, compared to PLCs?

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 potentially better returns, better value or higher levels of service.

Over the last 10 years, the average mutual with-profits policy produced 29% more than an equivalent from a PLC insurer – that’s around £11,400 more after 25 years for a £50 per month policy.

(Source: Association of Financial Mutuals:  AFM Key facts about mutual insurers and friendly societies November 2014)

What is a Mutual?

UK financial organisations are either authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) and can be regulated by one or both regulators, 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 their members and their profits are usually re-invested for the benefit of members, although some may be used for internal finance to ensure the mutual is sustainable, safe and secure.

Today, UK mutuals account for over £116 billion in revenue every year and 1 in 3 people in the UK are a member of at least one mutual. (Source: The Mid-Term Mutuals Manifesto 2013 and the Mutual 2013 Yearbook)

Membership and Extras

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.

Help and support

Where can I get help?

For help and support, please contact Foresters Friendly Society.

Tax Exempt Savings Plan - Foresters Extras >>

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