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Tools & Guides

A glossary of savings and investment terms ... helping to make finance easier to understand

Tools & Guides

Glossary

Or, to put it simply ... some of our terms explained in plain English.

Asset Class

An asset class is a group of assets that have common characteristics. Investors traditionally view asset classes to include things like stocks, bonds and property, amongst others.

Association of Financial Mutuals

This is the trade body that represents mutual insurers, friendly societies and other financial mutuals across the UK.

Beneficiary

The person(s) nominated to receive up to £5,000 from the sum payable at death.

Bonuses

Your savings plan or 50+ Life Cover policy invests in our Order Insurance Fund (or the ethical section of the fund if you have an Ethical Investment). Depending on the growth within the fund, your plan's value may increase through the addition of annual bonuses and a possible final bonus when the plan matures or is cashed-in. Once added, these bonuses cannot be taken away and will add to the value of the payout you receive.

Branch

Foresters Friendly Society has over 190 branches across the UK. These are not bricks and mortar branches but instead regional groups of members who may socialise together. If you wish to join your local branch when you take out a Foresters product you must specify this when you apply. You will be able to claim discretionary benefits from your local branch and they may contact you with details of their annual social activities. Branches may sometimes be referred to as Courts which is a historical term.

Capitals Gains Tax

Capital gains tax is a tax on the increase in value of possessions - such as a second home, antiques or shares - during the time you have owned them and any tax is due when you sell or dispose of them.

Most assets are liable to Capital Gains Tax, however some are exempt, such as your car, personal possessions disposed of for £6,000 or less and, usually, your main residence.

Cash NISA

A Cash NISA (New Individual Savings Account) is simply a long-term savings account, which allows you to save up to your maximum annual NISA allowance tax free. Cash NISAs are available to anyone over the age of 16, and come in two types:

  1. Instant Access, where you have direct access to your money and can withdraw at any time.
  2. Fixed Rate, in which you lock your moneyawayfor a set period of time to potentially benefit from a better rate of interest.

Foresters Friendly Society does not provide a Cash NISA.

Child Trust Fund

A Child Trust Fund (CTF) is a long-term tax-free savings account for children. CTFs are no longer available and have been replaced with Junior ISAs, however existing policies carry on as normal offering an affordable and tax-efficient way to save for your child's future.

You, your family and friends can still contribute to your child's Trust Fund, so long as the total amount in any year does not exceed the annual allowance.

Contribution

The amount you pay into your plan. Depending on the product taken out this can be a monthly or lump sum contribution.

Direct Debit

The easy, efficient way to make regular monthly contributions into your plan. Payments are transferred direct from your Bank or Building Society account.

FCA

The Financial Conduct Authority (FCA) is an independent non-governmental body that jointly regulates the financial services industry in the UK with the Prudential Regulation Authority (PRA). Foresters Friendly Society is regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Registration No. 110029).

Financial Services Compensation Scheme (FSCS)

The FSCS is the UK's statutory fund of last resort for customers of financial services firms. This means that FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it. The FSCS is an independent body, set up under the Financial Services & Markets Act 2000 (FSMA).

Financial Year

The financial year (or tax year) runs from 6th April to 5th April the following year. This means that you have up until 5th April to contribute to a NISA for that year.

Foresters Extras

When you take out a policy or membership with Foresters Friendly Society you automatically get access to Foresters Extras, our membership benefits package, at no extra cost. Extras includes a GP Consultation Line, access to Foresters Care and to discretionary benefits amongst other things.

Friendly Society

A friendly society is a mutual organisation which is owned by, and run for, the benefit of its members. A friendly society does not have shareholders which means the profit it makes can be distributed amongst its members or re-invested in the organisation to provide a better service for its members. Foresters Friendly Society is one of the UK’s leading Friendly Societies.

Fund

See Order Insurance Fund and With Profits Fund.

Guaranteed Maturity Amount

The guaranteed maturity amount, or guaranteed sum, is the minimum amount you will receive upon maturity. This is subject to you maintaining all your monthly contributions into the plan for the full term.

Guaranteed Minimum Amount

Please see Guaranteed Maturity Amount

Guaranteed Savings Plan

Our Guaranteed Savings Plan is a long-term regular savings plan into which you can make a fixed monthly payment of any amount between £50 and £100 for your chosen term of 10 to 25 years. 

Guaranteed Sum

Please see Guaranteed Maturity Amount

Income Tax

Income tax is a tax on income and payments received from any source. However not all income is taxable and there are reliefs and allowances that mean that you don’t necessarily pay tax on every penny you get.

Investment Bond

An Investment Bond is a medium to long-term savings plan designed to provide potential growth on a single lump sum investment.

Investment Term

The number of years over which you pay contributions into your plan.

Long-term savings plan

A long-term savings plan is a term attributed to a variety of savings plans, such as NISAs, Investment Bonds and Tax Exempt Savings Plans. These plans are intended to be kept for at least 5 to 10 years.

Market Value Reduction (MVR)

This is a deduction we may apply when you make regular or partial withdrawals or fully cash-in your plan. Its purpose is to be fair to both policyholders leaving the fund and those staying by ensuring that the cash-in value is not unfairly higher than the market value of the plan's assets and that a fair share is left for the remaining policyholders. This adjustment could have the effect of reducing the value of your plan at that time and in some circumstances could mean that you get back less than you have paid in. We will never apply an MVR on death. 

Maturity

Maturity or Maturity Date refers to the final contribution date of your savings plan and it is at this point that your cash sum is due to be paid.

Member

When you take out a financial product with Foresters Friendly Society you automatically become a member of the Society. As Foresters has no shareholders our profits are shared amongst our members through bonuses which may be added to our with profit plans and our Foresters Extras membership benefits package, or by reinvesting them with the aim of enhancing the customer service we provide.

Mutual

A mutual is an organisation that supplies financial services products, and which is owned by its customers, or members. That means there are no shareholders to pay profit shares to or account to, and a mutual can concentrate entirely on delivering products and services that best meet the needs of its customers.

National Insurance Number

This can be found on a payslip, form P45 or P60.

New Individual Savings Account (NISA)

A New Individual Savings Account (New ISA/NISA) is a medium to long-term savings plan, which helps you to save tax-free, as you don't need to pay any Income or Capital Gains Tax on the return.  Everyone in the UK gets a NISA allowance to save tax free each year, and you can save your annual NISA allowance in Cash, Stocks and Shares or any combination of the two.

NISA

NISA is the commonly used abbreviation for a New Individual Savings Account.

Order Insurance Fund

Foresters Friendly Society's with profits fund that invests in a balanced mix of investments.

See With Profits Fund

Payments

See Contributions and Premiums

PRA

The Prudential Regulation Authority (PRA) is a part of the Bank of England and responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. Foresters Friendly Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Registration No. 110029).

Premiums

The amount you pay into your insurance policy each month.

Smoothing

In good years, we may hold back some of the investment return from the Order Insurance Fund and use it to top up bonuses in years when the fund performs less well.

Stocks & Shares NISA

A New Individual Savings Account (New ISA/NISA) that invests your money in a range of different asset classes such as stocks and shares. Your complete annual NISA allowance, or part of it, can be invested in a Stocks & Shares NISA. Stocks and Shares NISAs are available to anyone over the age of 18 and allow you to save tax free.

Tax

See Income Tax and Capital Gains Tax

Tax Exempt Savings Plan

A tax free savings plan only available through a Friendly Society. There is also a Child Tax Exempt Savings Plan available for anyone under the age of 16. Maximum monthly contributions is £25, minimum term is 10 years.

Tax Free

The money that you pay into a plan is invested in a fund which is free of tax on both income and capital gains, although profits earned on equities within the fund will have been taxed at source and cannot be reclaimed. Please be aware that tax rules might change and depend on individual circumstances.

Tax-efficient

Tax-efficient has the same meaning as Tax-free for the purposes of our savings and investments plans.

Term

See Investment Term

With Profits Fund

A fund that invests in a balanced mix of investments such as property and stock market investments.

The intention of with profits is to give relatively cautious investors a taste of the stock market, but without too much risk. Investors' premiums are paid into a central fund with those of other with profits investors and, in return for monthly premiums, the insurance company promises to pay a cash sum at the end of the policy's term.

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. This is called smoothing.

A large part of the policy's final value depends on bonuses paid during the investment period and when the policy matures. Bonuses may be declared annually and possibly a final bonus may be added at the end of the plan. Bonuses are not guaranteed and will depend on the future performance of the fund.

You may get back less than you have paid in dependent on investment term and the conditions at withdrawal.