How does Tax-Exempt Savings work?

You invest a regular monthly premium (max £25) with the Society.

These are life insurance plans and they havea death benefit, the Sum Assured (which has to meet the requirement of tax legislation).

The Sum Assured is based on the premiums you pay and the term you choose.

Your money is invested in our with-profits fund.

At the end of each calendar year, we add a bonus to the Sum Assured and send you a bonus notice.

Once added, that bonus is a permanent addition to your investment with us.

Bonuses are compounded, so in subsequent years you earn bonuses on the bonuses.

The Sum Assured and bonuses are payable at maturity or earlier death.

We also normally add a final bonus when the benefit is paid.

Are there limits on premiums?

You and your partner are each limited to £25 per month in these plans, and that includes tax-exempt contracts with other Friendly Societies. If you want to save more, then ask for our separate brochure on Long Term Savings

Can I choose how long to save for?

The endowment savings plan can be chosen for any term between 10 and 35 years but it has to mature before age 60 (65 for non-smoker). We illustrate a term of 10 years in the Key Features booklet, but will provide you with a personal illustration based on the term you prefer (and on the premiums you select).

The whole life savings plan has to be taken out before age 50 (55 for non-smokers) to secure the illustrated Sum Assured, but you can still take out a plan up to age 60 (65 for non-smokers) for a reduced Sum Assured - about 5% lower than illustrated. Again you will receive a personal illustration that reflects your own circumstances.

Can I leave my money with you at the end of the term?

The whole life savings plan has a premium term of 10 years and is the more flexible way of saving, as you can choose to cash it in after 10 years or let it continue to attract bonuses - at a higher rate. The endowment savings plan pays out on the chosen date, but cannot be left to grow.

The tax concession is of the greatest value the longer you keep your funds invested. This could be achieved either by choosing a whole life savings plan or an endowment savings plan to age 60 (65 for non-smokers).

Can I cash in before the end of the term?

Contracts can be cashed in for a surrender value. You can only cash in a plan completely - we will not permit part surrenders.

Once you have been paying premiums for 5 years, the surrender value will usually exceed what you have paid in - but it could be less in the early years. The surrender value reflects our investment return over the period of your savings. Normally, it will only be slightly less than if you had originally chosen an endowment plan for the actual term to the date of surrender - the difference reflecting our costs including the life cover you will have enjoyed.

Will I lose my tax benefits?

There will be a liability to tax on early surrenders - currently this is 20% of the profit you make for basic rate taxpayers or 40% for higher rate taxpayers. This tax charge only applies in the first 10 years.

Who can take out a tax-exempt Plan?

You must be over the age of 18. To invest with us you must work or have worked in the police service in London - or be the partner or close relative of someone who does.

We also have a tax-exempt plan for children currently under the age of 15. Please ask for details.

Where is my money invested?

We invest your money in our with-profit fund, which is spread across a range of assets - government and other bonds, UK and international shares, and UK commercial property.

How are bonuses determined?

Bonuses are decided by our Board acting on the advice of the withprofits actuary.

A key factor in determining bonuses is the investment return in recent years. More detail is given at the back of the Key Features booklet.

How do I apply for an MPFS tax-exempt Plan?

Please make sure you read the Key Features and guide to our with-profits fund – and fill in the application form. Send it to us with your payment instructions.

Serving officers or staff in the Metropolitan and officers in the City of London Police Services can authorise us to take monthly premiums from their salary - both for their plan and that of their partner.

Any amount subscribed in this way for a partner will be for their benefit. It will be their tax status on encashment that determines whether there is any tax to pay at that time.

If you are retired, or a relative, or simply wish to pay by direct debit, please ask for a direct debit form (unless you already pay us this way).

What if I change my mind?

We will send you a certificate of membership and a cancellation notice. If you change your mind, you can return the notice within 30 days for a full refund.