Children’s Tax Exempt Plan

Anyone can open a Children’s Tax Exempt Plan.  If you are not the child’s parent or guardian, we’ll ask you to confirm that they agree to you setting up the plan. We will then send the plan documents to them so you will need to provide their details as part of the application process.

If the person paying into the plan isn’t the parent or guardian, they’ll receive a copy of the Direct Debit agreement to show they are paying the contributions. They’ll also have the right to cancel the children’s savings plan in the first 30 days.

Unfortunately not. 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 children’s savings plans such as a Junior ISA.

This plan includes life cover at no additional cost, meaning that if your child passes away before the plan ends then their 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.

Until the child reaches the age of 10, the life cover will be the return of the monthly contributions that have been paid into the plan. After they turn 10, the life cover is calculated at 75% of the total contributions you are due to make over the plan’s full term which you choose when you open it.

In both 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.

As with any investment, there are costs in managing the plan on your child’s behalf. These include an annual management charge and a monthly administration charge which are deducted from the value of their plan.

For more information about charges, see the Children’s Tax Exempt Plan Key Information and Important Information documents

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.

For more information on the POIS Flexible Growth Fund please see the Fund Information on our POIS website.

As a responsible investor, we want to manage ESG risks and opportunities when investing on behalf of our members.

We have identified certain sectors, products and services, in which we will not invest, above a certain threshold due to ESG-related risk factors.

Consequently, exclusions on controversial weapons, palm oil, soft commodities and climate risks are applied across all assets.

We also exclude the following sectors and areas within our Flexible Growth Fund:

• Tobacco: To avoid financing the tobacco industry and thus contribute to protecting public health.
• Defence: White Phosphorus – To avoid financing companies producing or distributing incendiary weapons with white phosphorus.
• Low ESG Quality: Tight monitoring of companies with the worst ESG practices.
• Severe Controversies: To avoid financing companies in violation of the United Nations Global Compact.

We’d urge you to keep up your payments. If you stop making contributions, the life cover will end, so, if your child passes away, the payment returned to their estate will be the value of the plan.

If you miss some monthly contributions to the plan, you have 13 months to pay the missing contributions, all together 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.

This is a mid to long-term savings plan so you should aim to keep the plan open for the length of time you choose when you open it.  That said, we appreciate that personal circumstances can change. So, if you do need to cash the plan in early you should read the Important Information document to see what charges may apply.

Your child cannot cash in this plan until they reach the age of 16. The payout will be paid to your child at all times, as the plan is for their sole benefit.

If you pass away while paying contributions on behalf of a child, someone else may continue to pay the contributions so the plan can continue to its maturity date.  If there is no one to continue paying into the plan, the plan can either be cashed-in or stopped.

Please see the Important Information document for further details.  Some charges may apply.

We’ll send the child a maturity information pack a little while before the plan is due to mature. This will advise how much the cash lump sum payment will be and will detail the information we’ll require so we can transfer the money to them. If the maturity date is set for the child’s 16th birthday, the maturity information pack will be sent to the parent/guardian.

When the plan matures all the money saved and all investment returns less charges will be paid directly to your child. So that we can do this, your child will need a bank account set up in their name.

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.