Tax Exempt Savings Plan
Get saving for a
If you thought ISAs were the only way to save tax-free, think again. Our Tax Exempt Savings Plan offers you an additional tax-free allowance. Save regularly and you’ll see a guaranteed cash sum. Good news for you. And good news for your money.
You might expect saving for the future to be a costly exercise. Not with our Tax Exempt Savings Plan. It’s affordable saving of only £25 a month. What you’ll get out, however, is something altogether more exciting. Not only is it tax-free, but it’s guaranteed too. And as long as you keep making payments for the agreed period, you’ll see a tidy tax-free sum. Plus there’s the opportunity for growth through the addition of bonuses. The only problem is wondering what to do with it when it matures!
Why choose the Tax Exempt Savings Plan?
An affordable and guaranteed way of saving regularly for your future by setting up a monthly Direct Debit of just £25 for your chosen term.
Available to all UK residents aged 16 to 80.
It’s extra useful because it’s an additional tax-free allowance on top of your annual ISA allowance.
Your money is invested in our top performing With Profits fund and has the potential to grow thanks to annual and final bonuses. (Source: Barnett Waddingham Survey Dec 2018)
Choose how long you want to save for from 10 to 25 years. You can even select the exact date such as a special anniversary, birthday or retirement.
Access to Foresters Extras – membership benefits – including discretionary grants to help you to cover the cost of things like higher education and healthcare costs.
“I’ve had savings accounts before, mainly with my bank, but I always used to end up taking my money out of them soon after I put it in. With the Tax Exempt Savings Plan I put in £25 each month by Direct Debit that is then locked away. My money is growing and I’ve been paying in for 10 years already. It’s amazing how quickly it has gone. My Tax Exempt Savings Plan will mature in 5 years’ time so I am already planning what I will do with the cash payout!”
A real-life example
A £25 per month Tax Exempt Savings Plan which commenced in November 2008 with a 10 year term provided a payout of £3,438.78 at maturity. This is an average annual return of 2.7% and a total return of 14.6%, after charges.
Past performance should not be seen as a reliable indicator of future results and the addition of annual and final bonuses is not guaranteed.
- Following a re-price, all TESPs taken out from 1st January 2018 will have a guarantee of 91% of contributions. This change to the guaranteed amount does not impact the future investment performance of your plan, but does mean the amount you receive at the end of the plan could be lower than your contributions.
- The final bonus rate is based on the year that the policy commenced and can change at any time.
- The above graph is provided for information purposes. The potential for future bonuses depends on the performance of the Order Insurance Fund and how we distribute any profit.
Ready to start making tax-free savings? Apply today!
Added value for you – Foresters Extras
Taking out a Tax Exempt Savings Plan is only the start. By doing so, you’ll be a part of the Foresters Friendly family and can enjoy some wonderful, unique benefits including discretionary grants to help you cover the cost of things like higher education, dental and optical costs.
Can I open more than one Tax Exempt Savings Plan?
In a word, no. You see, under current legislation each person (including children) can save up to a maximum of £25 a month in a Friendly Society tax free regular savings plan. And because monthly contributions for this plan are fixed at £25, you can’t hold more than one plan.
However, any contributions above these limits can be invested in our other savings plans.
What if I already have an ISA?
That’s ok. A Tax Exempt Savings Plan like this provides you with an additional tax-free allowance, in addition to your ISA allowance. You don’t need to pay capital gains or income tax on the returns, even if you’re a higher rate tax payer.
However, if you stop your monthly payments into the plan, or you cash it in early, you could end up having to pay tax on any gains. Tax rules may change in the future.
What is the guarantee?
Our Tax Exempt Savings Plan guarantees that the minimum amount you will get back at the end of your chosen term is 91% of the monthly contributions you have made, as long as you keep paying in the monthly contributions for the full term.
And, whilst the addition of bonuses is not guaranteed, there’s the potential for bonuses to increase the amount you receive. Once added a bonus cannot be taken away and will become part of the guaranteed value, subject to all monthly contributions being paid.
As further protection for you, we’re covered by the Financial Services Compensation Scheme. This means that in the unlikely event that we could not honour the guarantee (i.e. if we were declared insolvent), you would be able to make a claim under the Scheme.
Are there any charges?
As with any investment, there are costs in running the fund in which your contributions will be invested. These include the costs of buying and selling assets. And because we don’t believe in hidden costs, we deduct charges upfront before we declare bonuses. So there are no additional charges for you to pay. For more information about charges, see the Tax Exempt Savings Plan Key Information Document and Important Information documents.
Where is the money invested?
The money you pay into the plan is pooled together with other policyholders’ money. Then it gets invested in our top performing With Profits fund. This fund invests in a mix of assets including property, equities, cash and UK government bonds, to help minimise risk and increase the potential for returns. The best part is that you don’t have to be an investment whizz. Our in-house expert investment team, alongside our external investment managers, will manage the fund on your behalf – and make all the investment choices for you.
Please see the Principles and Practices of Financial Management (PPFM) for the latest information on our investment strategy.
What interest does the plan pay?
The Tax Exempt Savings Plan doesn’t pay interest. Instead, our with profits Order Insurance Fund provides your plan with the potential for growth by way of bonuses. The better the fund does, the more bonuses you could potentially see. Any profits generated by the fund are used to add an annual bonus to your guaranteed sum and possibly a final bonus when the plan reaches the end of its term.
Since 2010 the following annual bonus rates have been declared for the Tax Exempt Savings Plan:
- 0.25% of the guaranteed maturity amount and 0.75% of previous bonuses
The guaranteed maturity amount is 91% of the total amount you will pay into the plan when it reaches maturity and is the guaranteed minimum amount you will receive. This is subject to you paying all your monthly contributions into the plan for its full term.
For example if you are saving £25 for 10 years, the guaranteed maturity amount for your plan is £2,730. So each year, if a bonus is declared it will be calculated on the total £2,730 instead of your total contributions for that year (£300).
Additionally, if your plan has had a total of £70 in bonuses declared previously, for example, this amount may receive a bonus too which all adds to the total value of the plan.
The addition of bonuses is not guaranteed, however once a bonus has been added to the plan it cannot be taken away and will become part of the guaranteed value, subject to all monthly contributions being paid.
To find out more about the addition of bonuses and how we manage our fund please read our Principles and Practices of Financial Management (PPFM).
We may vary the design of a product to best meet the needs of our policyholders which may affect the timing and size of future bonuses. Therefore the above rates are provided for information purposes only and should not be considered an indication of likely future performance.
Can I make withdrawals from my Tax Exempt Savings Plan?
No, we’re afraid not. Tax Exempt Savings Plans like this one are a fixed term regular saving plan so withdrawals are not possible until the plan matures. It’s all about playing the long game.
What happens if I stop paying?
We’d urge you to keep up payments if possible. But if you have to stop paying in, especially in the early years, you’re unlikely to receive as much as you have paid in. And if you stop paying in the first year, the plan will lapse with no value.
What happens if I pass away?
If you pass away, a refund of contributions paid to date will be payable to your estate. This may be subject to inheritance tax.
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. Of course, you may have to pay for this advice.
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We’re here if you need help or have any questions
If you’re a little stuck and need help, please get in touch. Our UK based team can help to make things as smooth and easy as possible (lines are open Monday to Friday 9 am to 5 pm).