What is a New Individual Savings Account (New ISA/NISA)?

From 1 July 2014 ISAs were reformed into a simpler product called, the New ISA or NISA for short. A NISA is a regular savings account best suited for medium to long-term savings. It's a great way to save in a tax-free manner, as you don't need to pay any Income or Capital Gains Tax on the return.  There are different categories of NISA such as 'cash' and 'stocks & shares' and there are also certain restrictions on how much money you can invest during each tax year.  

The overall NISA limit for 2018/2019 is £20,000 and you will be able to save your whole NISA allowance in cash, stocks & shares or any combination of the two. Foresters Friendly Society provides a Stocks & Shares NISA into which you can invest your whole NISA allowance during the 2018/2019 tax year.

Tax-free means free of tax in your hands. However, tax is automatically deducted from UK share dividends and that tax cannot be reclaimed. Please be aware that tax rules might change and depend on individual circumstances.

What are the rules that apply?

(All tax years start on the 6th April and end on the 5th April the following year).

Within the tax-efficient NISA savings wrapper you can invest in one or more of the following two forms of savings:

• An investment in stocks & shares.
• A cash deposit account.

You can invest in one or both of the above savings schemes with any provider.

The Foresters Friendly Society NISA is categorised as a Stocks & Shares NISA. This means you cannot invest in the Foresters Friendly Society NISA if, in this tax year, you already have another Stocks & Shares NISA with another provider.

During the 2018/2019 tax year, you can invest up to £20,000 in a Stocks & Shares NISA. 

What happens if I cash-in my NISA?

You can cash-in your investment whenever you want, but you may get back less than you have paid in. The cash-in value will depend on the amount invested, the amounts that have been withdrawn, the sum assured, and any annual bonuses that have been added. Depending on the investment returns achieved and our costs, in favourable investment conditions we may also add a final bonus to the NISA’s value. However in adverse investment conditions we may apply a Market Value Reduction (MVR) which would reduce the Plan’s cash-in value to below the sum assured.

How do I make withdrawals?

It is possible to make regular and one-off withdrawals from your NISA. Withdrawing money from your NISA will reduce the value of your remaining investment and reduce your sum assured. We may change the minimum withdrawal amount at any time, if this happens, we will give you reasonable notice. In adverse investment conditions we may apply a Market Value Reduction (MVR) at withdrawal. See the section below for details.

• Regular Withdrawals

After two years, you can make regular withdrawals from your NISA. The minimum regular withdrawal you can make is £50, so long as the value of the NISA after the withdrawal is at least £500. You can make regular withdrawals on a monthly, quarterly, half yearly or annual basis. If you decide to change the withdrawal amount or stop the withdrawal, you must provide one month's notice by contacting our Claims team on 0800 101 8312.

• Partial Withdrawals

You can make partial withdrawals from your NISA at any time.  The minimum withdrawal that can be made is £250 and the remaining value of the NISA after the withdrawal must not fall below £500.

To make a withdrawal please contact our Claims team on 0800 101 8312 or by email at claims@forestersfriendlysociety.co.uk. If you withdraw money from your NISA, it cannot be replaced.

What is a Market Value Reduction (MVR)?

This is a deduction we may apply to your sum assured when you make regular or partial withdrawals or fully cash-in your NISA. Its purpose is to be fair to both members leaving the Order Insurance Fund and those staying by ensuring that the cash-in value is not unfairly higher than the market value of the plan's assets and that a fair share is left for the remaining members. This adjustment will reduce the value of your NISA at that time and in some circumstances could mean that you get back less than you have paid in.

We have not applied an MVR to date on the Foresters Friendly Society Stocks & Shares NISA, however this could be applied in the future.

Are there any charges?

There is an Annual Management Charge which is initially set at 2% of the value of your NISA, which will be deducted before we declare any bonuses meaning that there are no additional charges for you to pay. This charge could increase, however it will never exceed 3% of the value of your NISA in any one year. The charges are designed to cover our costs for administering the NISA on your behalf.  For more information about charges, please see the Stocks & Shares NISA Key Information Document and Important Information.

How can I close my NISA?

1. Within the 30 day cancellation period

If you wish to close your NISA within the 30 day cancellation period, please complete and return the cancellation form, sending it to Foresters Friendly Society, 29-33 Shirley Road, Southampton, SO15 3EW.

• If this was a non-advised sale a full refund will be paid
• If this was an advised sale where an adviser fee was paid from your investment, all the money invested into the NISA will be returned, excluding any fee which will have already been paid to your Financial Adviser.

2. After the 30 day cancellation period has passed

You can cash-in your NISA whenever you choose after the 30 day cancellation period has passed, however due to the nature of the investment you may get back less than you have paid in. For more information please see the section 'What happens if I cash-in my NISA?'

How to check the progress of my NISA application?

If you have applied by post you should receive confirmation within 10 working days. If you haven't received confirmation after this time, or have any further questions relating to the policy application process then please call our Policy Admin team on 0800 101 8311 or contact us by email.

What are the different types of NISAs available?

• Cash NISA - available to anyone aged 16 and over.

• Stocks & Shares NISAs are available for anyone aged 18 and over.
  
  
• Lifetime ISA – available to anyone aged 18 – 39 wishing to save towards their first home or their retirement.

• Junior ISAs are also available for children under 18 who do not have a Child Trust Fund (CTF) account.

Who is eligible for a NISA?

Everyone in the UK gets a NISA allowance to save tax-free, each tax year. 

Cash NISAs are available to anyone aged 16 and over, Stocks & Shares NISAs are available to anyone aged 18 and over, and Junior ISAs are available for children who are under 18 and who do not have a Child Trust Fund (CTF) account.

Please note that tax rules may change and depend on individual circumstances.

What is the difference between a Cash and Stocks & Shares NISA?

Cash NISAs are available to anyone aged 16 and over, and come in two types:

1. Instant Access, where you have direct access to your money and can make withdrawals at any time.
   
   
2. Fixed Rate, in which you lock away your money for a set period of time to potentially benefit from a better rate of interest.

A Stocks Shares NISA is intended to be a longer-term investment which can potentially yield better returns. Stocks & Shares NISAs are available to anyone aged 18 years old and over. You should be aware that you may not get back what you pay into a Stocks & Shares NISA dependent on the investment conditions on withdrawal.

Can I hold more than one NISA?

In any one tax year you can open a Cash NISA and a Stocks & Shares NISA as long as the combined annual contributions do not exceed the annual NISA allowance. 

You can also hold NISAs from previous years.

Please note that tax rules may change and depend on individual circumstances.

Can I put cash into a NISA for my child?

Junior ISAs are available for children who do not have a Child Trust Fund (CTF) account, allowing you to save your child's annual JISA allowance tax free each year.

Find out more about the Foresters Junior ISA

Who is the Foresters Friendly Society Stocks & Shares NISA suitable for?

Providing you are aged between 18 and 80 and are a UK resident for tax purposes, the Foresters Friendly Society Stocks & Shares NISA may be suitable for anyone who can afford to put the lump sum or monthly contributions aside - perhaps to keep it for a rainy day or for long-term savings objectives. You should think carefully about the risks before deciding whether the NISA is right for you.  You may also wish to think about the Product Performance when considering a plan.

Can I change my NISA provider?

You may be able to transfer your current NISA to another provider. Each provider will have different terms and conditions for this and should be contacted directly for more information.

For information on how to transfer your NISA to a Foresters Stocks & Shares NISA please contact our Member Services department on 0800 988 2418 or at memberservices@forestersfriendlysociety.co.uk. 

I'm not sure if a NISA 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. You may have to pay for this advice.

What is the minimum payment?

You can choose to contribute regular amounts from just £50 per month by Direct Debit, invest lump sums or, if you prefer, you can use a combination of both up to a maximum of £20,000 this tax year. If you wish to invest lump sums, a minimum £500 lump sum contribution is required to open a NISA, then top ups of at least £250 can be made.

What is the maximum payment?

To benefit from tax exemption under current legislation, the maximum level of total contributions for a Stocks & Shares NISA is £20,000 this tax year.

Can I choose how much I pay?

You can set up regular contributions, invest lump sums or combine both options.  Regular payments will be collected by Direct Debit from your bank.

How do I top up my NISA?

You can top up your Stocks & Shares NISA with lump sum or regular monthly contributions. The combination of these cannot exceed the maximum NISA allowance in any one tax year. If you are uncertain about the maximum increase in contributions you can make for the rest of the tax year, please call us on 0800 988 2418.

Regular Contribution Top Ups

If you wish to set up regular contribution payments into your NISA, this can be done by setting up a Direct Debit:

Download the NISA Top Up Form, complete the Direct Debit instruction specifying the monthly contributions you would like to make. Then send it back to us and we will do the rest for you.

Lump Sum Top Ups

Lump sum contributions can be made:

What happens if I die?

The death benefit provided by your NISA will be paid to your estate. The guaranteed minimum amount payable on death is the sum assured plus any annual bonuses that have been added, less any withdrawals.

The initial sum assured is 70% of your initial investment. Any additional contribution increases the sum assured by 70% of each contribution.

In adverse investment conditions this means that the amount payable could be less than you have paid in. In more favourable investment conditions the amount payable could be greater than you have paid in. The amount payable may be subject to inheritance tax depending on the size of your estate. 

To enable the tax saving advantages of your NISA to continue, your spouse or civil partner will be able to inherit your NISA allowance up to the total value of your NISA holding(s). For further information please contact us.

Where is the money invested?

Any money you pay into the Stocks & Shares NISA is invested in Foresters Friendly Society's Order Insurance Fund. By spreading the money paid into the fund across a number of different types of investments you benefit from the exposure to a range of asset classes which may include stocks and shares, property and cash. A further advantage of this approach is that if the return from any one particular asset type is poor, your investment may be protected from the full impact of this fall as the other assets forming part of the overall investment may perform better.

How much could I expect to receive?

The amount you receive will be made up of the total amount you have paid into your NISA (minus any withdrawals), plus any annual bonuses added during the time you held the NISA for as well as a potential final bonus when you cash the NISA in. The payment and value of bonuses depends on the performance of our Order Insurance Fund and the addition of any bonus is not guaranteed.

In adverse investment conditions we may apply a Market Value Reduction (MVR). This could mean you get back less than you have paid in. We have not applied an MVR to date on the Foresters Friendly Society Stocks & Shares NISA, however this could be applied in the future.

What interest does the plan pay?

The Stocks & Shares NISA does not pay interest. Instead, the Order Insurance Fund provides your plan with the potential for growth by way of bonuses. What growth your NISA receives will depend on the performance of our Order Insurance Fund. The investment performance cannot be guaranteed.

How do bonuses work?

At the end of each year, we aim to declare an annual bonus to add to your sum assured, based on how the fund performs and the costs incurred. In addition, when you decide to cash-in your NISA, Foresters may add a final bonus based on the overall investment growth achieved and expenses incurred.

This is different from a Bank or Building Society account or Cash NISA where interest is added, because any growth on the investment with Foresters depends on the performance of the underlying fund. 

Although in some investment conditions the growth in a Stocks & Shares NISA might not be as much as that on an interest-paying account, investing in this way means there is the potential for growth over and above the level which might be achieved on interest-paying accounts.

The addition of bonuses is not guaranteed and therefore it is possible that your NISA might not receive any annual and/or final bonus and so in some investment conditions you may get back less than you have paid in.

Who are Foresters Friendly Society?

Foresters Friendly are a mutual society, founded in 1834 by ordinary people with a common purpose - to support each other through financial and other difficulties.

We've been looking after our members, and their finances, for over 180 years, offering care and protection through relevant affordable financial products.

Since 1834 our aim has been to be open, approachable, honest and fair, treating all our members as individuals.

We always put the interests of our members first.

How safe is my money?

You'll be pleased to hear that our funds have grown steadily over the years and our financial position remains strong. (Source: Reports & Accounts 2017). However, note that past performance is not a guide to the future.

However, if in the unlikely event that Foresters Friendly Society were to be declared insolvent, you would be able to make a claim under the Financial Services Compensation Scheme.

What is a Friendly Society?

Friendly Societies have been around for hundreds of years. They were founded on the idea of mutuality - that if a group of people contributed to a mutual fund, an individual within the group could benefit in a time of need. The principles still apply - friendly societies are owned by, and operate in the interests of, their members. Unlike public limited companies, they use revenues to the benefit of their members rather than distributing profits to their shareholders.

How do Mutuals perform, compared to PLCs?

With no shareholders to answer to, mutual societies can ensure their profits are only used for their members’ benefits by sharing this amongst members, or re-investing to provide potentially better returns, better value or higher levels of service.

Over the last 10 years, the average mutual with-profits policy produced 29% more than an equivalent from a PLC insurer – that’s around £11,400 more after 25 years for a £50 per month policy.

(Source: Association of Financial Mutuals:  AFM Key facts about mutual insurers and friendly societies June 2015)

What is a Mutual?

UK financial organisations are either authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) and can be regulated by one or both regulators, and are either mutuals or public limited companies (PLCs). Unlike a PLC, a mutual organisation has no external shareholders to pay in the form of dividends and does not seek to make large profits or capital growth.

Mutual organisations are owned and run for the benefit of their members and their profits are usually re-invested for the benefit of members, although some may be used for internal finance to ensure the mutual is sustainable, safe and secure.

Today, UK mutuals account for over £116 billion in revenue every year and 1 in 3 people in the UK are a member of at least one mutual. (Source: The Mid-Term Mutuals Manifesto 2013 and the Mutual 2013 Yearbook)

I read somewhere about benefits - but I imagine I pay for those somewhere?

When you take out one of our policies or plans, you automatically become a member of Foresters. As a mutual, we don't have to answer to external shareholders. Instead, we use all our profits to benefit our members. All Foresters customers can take advantage of Foresters Extras, a range of benefits we offer at no additional cost.

Do I get any additional benefits as a Foresters customer?

All our customers benefit from Foresters Extras, a range of benefits we offer at no additional cost.

Where can I get help?

For help and support, please contact Foresters Friendly Society.