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.

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 are deducted from the value of your plan.

There is an Annual Management Charge of 1.95% of the value of the fund. As the POIS Flexible Growth Fund may invest in other funds and/or alternative investments, additional charges may be incurred by the fund. These change but are currently estimated to be no greater than 0.1% of the value of the fund each year. These fund charges are deducted directly from the fund on a daily basis and the fund prices are shown after the effect of these.

There is also a monthly administration charge of £1.50 which is taken directly from the Plan by cancelling units. Additional costs may be incurred by the fund for the safe keeping of certain assets.

A charge will be deducted if the Plan is cashed in before its 10th anniversary. The amount of the charge will depend on how long you have had the plan.

The charges that apply are:

Before the 1st anniversary – £125
From the 1st to before the 2nd anniversary – £100
From the 2nd to before the 3rd anniversary – £75
From the 3rd to before the 4th anniversary – £50
From the 4th to before the 10th anniversary – £25

Other costs may exist that are not paid through us or imposed by us.

For more information on the charges applied to these funds, please see the Plan conditions.

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.

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.