Investment Bond

The Bond can either be opened in your name (single life) or both your name and another’s name (joint lives) which can be ideal for couples.

If the plan is taken on a joint names basis, both planholders are automatically treated as holding equal shares in the Investment Bond. If one planholder passes away, the other automatically becomes the sole planholder of the Investment Bond.

If an Investment Bond is set up in joint names this will be on a second death basis. That means that the death claim is not paid until the death of the second of the two lives and the Bond comes to an end at this stage.

We’ll send the annual statement and other correspondence to the first named planholder. If you would like to make any changes to your Investment Bond, the signature of the planholder or, in the case of joint life policies both the planholders, will be required. Just let us know and we’ll tell you what you need to do.

You can invest a single lump sum of between £5,000 and £150,000 into the Investment Bond. You cannot add to your lump sum Investment Bond once it’s in place, but if you want to invest more money, then you simply need to open another Bond.

Yes, you can make one-off withdrawals of at least £250 at any time, as long as the remaining balance of your Investment Bond does not fall below £500. You can also make regular monthly, quarterly, half yearly or annual withdrawals, of at least £50, as long as the value of your Bond remains over £5,000.

You need to remember that making withdrawals could reduce your Investment Bond to less than its initial value and could also have tax implications (please see the common question below for further details) .

For further information on the terms of withdrawals please take a few minutes to read the Important Information document.

You can withdraw up to 5% each year of the amount you have paid into your Bond without paying any immediate tax on it. This allowance is cumulative so any unused part of the 5% limit can be carried forward to future years (although the total cannot be greater than 100% of the amount paid in).

However, if you decide to withdraw more than 5% per year and/or you cash in your entire Bond, we will calculate any gains on your money, and you may be subject to Income Tax. For higher or additional rate taxpayers this means that there may be an amount of tax to pay. Please note that tax rules may change and depend on individual circumstances.

For further information please read the Important Information document.

Yes, that’s absolutely fine. You can place your Investment Bond in Trust. You may want to take advice from a solicitor before doing this.

Your money is invested in our consistently well performing Order Insurance Fund with the aim of providing investment growth. Dependent on the performance of our fund, we aim to add annual bonuses and a final bonus to your Bond which will increase your plan’s value. The addition of bonuses is not guaranteed.

We never forget it’s your money, so we take extra good care of it. Within our fund, your money is spread across a number of different types of investments including property, equities, cash and UK government bonds, to help minimise risk and increase the potential returns. You won’t have to make any investment choices, our expert fund managers manage the fund on your behalf.

Please see the Principles and Practices of Financial Management (PPFM) for the latest information on our investment strategy.

As a friendly society, it’s particularly important to us that our investments are managed in an ethical and responsible way. Foresters is a signatory of the Principles for Investment (PRI) which demonstrates our commitment to responsible investment, to reducing our impact on the environment and mitigating climate change risk in our investment portfolios.

When you open a plan, you can be confident that investing with us means your money will be invested in a trustworthy and environmentally conscious way. The PRI is the world’s leading supporter of responsible investment and promotes a better understanding of the investment implications of environmental, social and governance (ESG) factors.

Find out more about the 6 PRI principles we have signed up to here.

Many funds that invest in a variety of asset classes would have a mixture of equities and bonds.  These asset classes traditionally have a negative correlation, meaning that if equities go up in value, bonds generally go down in value.  The opposite happens when equities go down in value.  Over the past few years this correlation has moved to a positive correlation, resulting in equity and bond valuations moving in the same direction.  This can increase the risk of poor returns and increased volatility in fund values.

We use private assets to help diversify our fund and reduce its overall risk, as private assets are not so closely correlated with equity and bond (public) investments and so can help to balance investment volatility.  Private assets also offer the potential for higher returns as they are often long term investments.  The downside is that private assets offer lower flexibility than public assets. We monitor the overall exposure between private and public assets to ensure the mix meets our expected cashflows.

The Investment Bond doesn’t pay interest. Instead, by investing the money you pay into the plan into our Order Insurance Fund, which is a with profits fund, we provide your plan with the potential for growth by way of bonuses. Any profits generated by the fund are used to add an annual bonus to your Investment Bond and possibly a final bonus when you withdraw your money.

We have paid annual bonuses on our Investment Bond for the past 19 years.

• In 2022 the annual bonus rate was 1.25%.

The annual bonus is applied to the amount invested (minus any withdrawals you may have made from your Bond) plus any previous bonuses that have been added.

The addition of any bonus is not guaranteed and you may not get back the full amount originally invested, dependent on the investment conditions at withdrawal.

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 planholders which may affect the timing and size of future bonuses. Therefore the above table is provided for information purposes only and should not be considered an indication of likely future performance.

There is an Annual Management Charge of 2% of the value of your Investment Bond. And because we don’t believe in hidden costs, we deduct charges upfront before we declare bonuses. This means there are no additional charges for you to pay. This charge could increase, but we promise it will never be more than 3% of the value of your Bond in any one year. The charges are designed to cover our costs for administering the Bond on your behalf.

For more information about charges, please see the Investment Bond Key Information Document and Important Information.

Being a with profits investment, your Investment Bond will benefit from growth the longer it is kept invested. Ideally for a minimum of 5 years but the longer the better. However, you can cash-in your Bond whenever you want. The cash-in value will depend on the amount invested, the amounts that have been withdrawn and any annual bonuses that have been added. Depending on the investment returns achieved and our costs, in good investment conditions we may also add a final bonus. However, in not-so-good investment conditions, we may apply a Market Value Reduction (MVR) which will reduce the plan’s value and may mean you get back less than was paid in.

For more details please take a few minutes to read the Important Information document.

If you’re unsure as to the suitability of this product you should seek advice from a Financial Adviser.