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. 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. The only problem is wondering what to do with it when it matures!
Our Tax Exempt Savings Plan is provided by the Post Office Insurance Society (POIS) who are a part of Foresters Friendly Society, and can be opened by setting up a monthly Direct Debit.
Request a pack to find out more about the Tax Exempt Savings Plan request a pack
Why choose the Tax Exempt Savings Plan?
It’s a 10 year savings plan, after which time you can choose whether to cash in your plan, extend it for a further 10 years or leave it invested.
Available to all UK residents aged 16 to 74 who are not already investing their friendly society £25 per month tax exempt savings allowance.
It’s extra useful because it’s an additional tax-free allowance on top of your annual ISA allowance.
Your money is invested in the POIS Flexible Growth Fund for potential growth over the longer term.
Life cover is automatically included at no additional cost to you.
Access to membership benefits including discretionary grants to help you to cover the cost of things like higher education and healthcare costs
A real-life example
£25 per month Tax Exempt Savings Plan which commenced in July 2011 with a 10 year term provided a payout of £4,553.53 at maturity. This is an average annual return of 8.1% and a total return of 51.7%, after administration fees and charges.
The above graph is provided for information purposes. Past performance should not be seen as a reliable indicator of future results. The value of holdings within the fund can fall as well as rise, and you could get back less than you have paid into the plan. As the fund holds overseas assets, the Sterling value of these assets may rise and fall as a result of exchange rate fluctuations.
Ready to start making tax-free savings? Apply today!
Investing in the POIS Flexible Growth Fund
The POIS tax exempt plan invests in the POIS Flexible Growth Fund. This is an actively managed fund with the aim of achieving long term growth, while spreading risk across a wide range of investments. It invests mainly in shares, both UK and overseas, along with fixed interest investments such as Government gilts and property.
The money you invest buys units or shares in the fund and the units have a daily value which can be used to work out the current overall value of your plan.
To work out the value of your plan simply take the number of units your plan currently holds, and multiply this number by the current Unit Price for that plan.
For more information about the POIS Flexible Growth Fund and to see the daily unit value please see the about our funds information on the POIS website.
Added value for you – Member Benefits
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. In 2020, we gave back over £1.7 million to our Foresters and POIS members in the form of discretionary grants.
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.
Are there any charges?
As with any investment, there are costs in managing the plan on your behalf. These include an annual management charge and a monthly administration charge which are deducted from the value of your plan. For more information about charges, see the Tax Exempt Savings Plan Key Information and Important Information documents.
Where is the money invested?
The monthly contributions you make will purchase units in the POIS Flexible Growth Fund. The aim of the fund is to achieve long term growth, while spreading risk across a wide range of investments. It invests in UK and overseas shares, along with Global Convertible Bonds. It is an actively managed fund which means our expert fund managers make decisions about how to invest the fund’s money as opposed to the fund just following a market index.
The value of holdings within the fund can fall as well as rise, and you could get back less than you have paid into the plan. As the fund holds overseas assets, the Sterling value of these assets may rise and fall as a result of exchange rate fluctuations.
The price of each unit is based on the value of the fund, divided by the number of units in issue. The number of units bought will depend on the price of those units on the day the units are bought.
The price of the units may go down as well as up and you may get back less than you have paid in.
For more information on the POIS Flexible Growth Fund please see the Fund Information on the POIS website.
What is life cover?
One benefit of the Tax Exempt Savings Plan provided by POIS is that life cover is automatically included at no additional cost to you. This means that if you pass away before the plan ends then your estate will receive a cash payout. You won’t have to answer any medical questions when applying for the plan making it simple for you to take out but you will benefit from this type of cover.
The amount of life cover is calculated as 75% of the contributions you are due to make over the initial 10 year term.
If you are aged 56 or over when you apply, the amount of life cover is reduced by 2% for each year. For example, if you are 56, you will receive life cover based on 73% of the contributions you are due to make over the initial 10 year term. If you are 57 you will receive 71%.
In all cases, the life cover is available as long as monthly contributions continue to be paid. If the value of the plan is higher than the life cover, the plan value will be paid to the estate.
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, your life cover will end, so, if you pass away, the payment returned to your estate will be the value of the plan.
If you miss some monthly contributions into the plan, you have 13 months to pay the missing contributions, altogether in one lump sum, and continue paying into the plan. If, at the end of the 13 months, you have not made up the missing contributions there will be various scenarios that could apply. Please see the Important Information document for further details.
What happens if the plan is cashed in early?
If the plan is cashed in before its 10th anniversary, a charge will be deducted before the cash sum is paid to you. The amount of the charge will depend on how long you have held the plan, as shown in the Important Information document.
In the early years, it is possible the plan value may be less than the surrender charge due. In that instance, no plan value will be paid out and no further charge will be payable. If a payout is returned to you, you may be liable for tax on any growth.
What happens if I pass away?
If you were to pass away the value of the plan, or the life cover if higher, will be paid out. This will normally form part of your estate and may be subject to Inheritance Tax, depending on your individual circumstances.
If you wish, you can nominate a beneficiary to receive the value of your plan if you pass away, providing you have kept your contributions up to date. This can help to make a difficult time more bearable for your dependents. They can receive up to £5,000 immediately following your death. This can be done without having to wait for your estate to be administered, which can often be a lengthy process at a difficult time. Any returns over £5,000 would become part of your remaining estate and have to wait for probate.
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.
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).