Questions and Answers

What is an MPFS ISA?

It is a tax-efficient savings plan for regular savings and lump sum investments, designed as a Stocks & Shares ISA to comply with ISA regulations to shield your savings from income and capital gains taxes.

Who can take out an MPFS ISA?

You must be resident in the UK for tax purposes and 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.

How flexible is it?

You can alter the amount you invest, subject to the minimum premium of £30 pm. You can also stop contributions and restart them at any time - but please remember that you only earn bonuses on the money invested.

When can I take money out?

You can invest for as long as you want; there is no fixed term and no maximum age limit. You can contact us at any time to cash in part or all of your plan, although you should bear in mind that the plan is designed as a medium to long term investment.

How do I withdraw money when I need it?

All you have to do is send or fax us a signed letter detailing your request and giving details of the bank or building society account where we should pay your money. Requests received by Friday are normally credited to your account the following Wednesday. Where there is an intervening public holiday, different arrangements apply. Please contact us for more details..

How does the MPFS ISA work?

• You invest a regular monthly premium (min £30) with the Society
• You can also pay in lump sums (min £500, no limit for top ups).
• You can transfer a Cash or Stocks & Shares ISA to us from another provider (no limit).
• Each tax year, we start a new ISA plan for your contributions and send you a certificate showing your investments during the previous tax year.
• At the end of each calendar year, we add a bonus to all your investments and send you a bonus notice.
• Once added, bonuses are permanent additions to your investment with us.
• Bonuses are compounded, so in subsequent years you earn bonuses on the bonuses.
• Provided you invest each plan for at least 3 years, we normally add a final bonus when you cash it in.
• The ISA has no fixed term and you can leave it invested for as long as you wish. You should, however, view it as a medium to long term investment - at least 5 years.
• You can transfer your accumulated MPFS ISA to another provider, but please remember that our ISA is an insurance based contract and as such is designed as a medium to long term investment.

Where is my premium invested?

The premiums are invested in the Society's with-profits fund which is made up of equities, government bonds, commercial property, corporate bonds and cash. The appropriate "mix" is listed below as from 31st December 2007. For more information on how the with-profits fund works, please refer to the "How we manage the with-profits fund".

1. Equities 44%
2. Government Bonds 36%
3. Commercial Property 8%
4. Corporate Bonds 7%
5. Cash 5%

How are bonuses determined?

Bonuses are decided by the Board acting on the advice of the with-profits actuary. A key factor in determining bonuses is the investment return in recent years. Please view How we manage the with-profits fund for more details.

What happens if the stockmarket falls?

All of our assets can rise and fall with the stockmarket, although investing in a range of assets does provide some protection to the fund. It is possible that this will result in the value of your plans reducing from time to time.

From the 10th anniversary onwards, measured from the end of each tax year, we guarantee that the plan value will never be less than the premiums you paid in plus all bonuses.

How do I apply for an MPFS ISA?

Just fill in the appropriate application form (Form A- for Police Officers or Police Staff, Form B - for partners or relatives). Form B should be accompanied by reasonable proof of identity (Copy Birth Certificate, Driving Licence or Passport). Send the form to us with your payment instructions or a cheque for any lump sum investment.

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 must be their own money.

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 this way).

What happens if I die?

This plan will cease and the current value of your plan will be paid to your estate.

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.

What I might get back?

An example - What you might get back after 10 years for a regular monthly premium of £100:

• If investments grew at 5% a year - you would get back £14,400
• If investments grew at 7% a year - you would get back £15,900
• If investments grew at 9% a year - you would get back £17,700

The early years

Warning - if you cash in during the early years, you could get back less than you paid in. The following examples show what you might get back - they assume investments will grow at 7% a year.

At the end of year	Total premium paid in to date	Effect of deductions to date	What you might get back
1	£1,200	£15	£1,220
2	£2,400	£62	£2,500
3	£3,600	£145	£3,840
4	£4,800	£239	£5,270
5	£6,000	£346	£6,790

The later years

At the end of year	Total premium paid in to date	Effect of deductions to date	What you might get back
10	£12,000	£1,170	£15,900

What are the charges?

• The deductions include the cost of expenses, charges, any surrender penalties and other adjustments.
• The last line in the table shows that over a ten year period the effect of the total deductions could amount to £1,170.
• This would have the same effect as bringing down the investment growth from 7.0% a year to 5.7%.

An example - What you might get back after 10 years for a lump sum investment of £4000:

• If investments grew at 5% a year - you would get back £5,940
• If investments grew at 7% a year - you would get back £7,180
• If investments grew at 9% a year - you would get back £8,640

The early years

Warning - if you cash in during the early years, you could get back less than you paid in. The following examples show what you might get back - they assume investments will grow at 7% a year.

At the end of year	Total premium paid in to date	Effect of deductions to date	What you might get back
1	£4,000	£102	£4,170
2	£4,000	£215	£4,360
3	£4,000	£249	£4,650
4	£4,000	£288	£4,950
5	£4,000	£334	£5,270

The later years

At the end of year	Total premium paid in to date	Effect of deductions to date	What you might get back
10	£4,000	£684	£7,180

What are the charges?

• The deductions include the cost of expenses, charges, any surrender penalties and other adjustments.
• The last line in the table shows that over a ten year period the effect of the total deductions could amount to £684.
• This would have the same effect as bringing down the investment growth from 7.0% a year to 6.0%.

What about tax?

There is no liability for Income or Capital Gains Tax during the life of the plan, nor on cashing it in. You can even disregard it when completing your Tax Return (however, this could be changed by the Government at any time).

How will I know how my plan is doing?

We will send you a bonus notice every year, showing you the annual bonuses that have been earned; any final bonus (payable on encashment) will not be shown.

How do I contact you?

Metropolitan Police Friendly Society Limited,

Berwick House,

8-10 Knoll Rise,

Orpington,

Kent,

BR6 0EL,

Phone: 01689 891454

Fax: 01689 891455

Metphone 28192

Email: enquiries@mpfs.org.uk

Web: www.mpfs.org.uk.

Can I transfer my existing ISA to the MPFS one?

Yes, please read the following guidance carefully and if you wish to proceed with a transfer to us, just complete the "Transfer Application Form" (Form C) and return it to us.

What types of ISAs can I transfer to the MPFS Stocks and Shares ISA?

You can transfer an existing Stocks & Shares ISA (including a former PEP), to the MPFS one, and you can transfer an existing Cash ISA to the MPFS Stocks & Shares ISA.

How much can I transfer?

1. All or part or none of your contributions in previous tax years; and
2. All or none (but not just part) of your contributions so far in the current tax year.

What happens if the money was saved in previous tax years?

You can transfer some or all of your ISA money saved in previous tax years to our ISA without affecting your current year's annual ISA investment allowance.

For example - let's say you have a total of £9,000 saved in Cash ISAs from previous tax years, and you plan to invest your full current year ISA allowance of £7,200 into our Stocks & Shares ISA. In the same tax year, you are allowed to transfer some or all of the £9,000 to our ISA, without breaching the maximum limits.

What happens if the money was saved in the current tax year?

You are able to transfer ISA money saved in the current tax year to our Stocks & Shares ISA. Such transfers must be the whole amount saved in that ISA in the current tax year up to the day of the transfer. You can transfer a Cash ISA to a Stocks & Shares ISA (but not if that means you are running two Stocks & Shares ISAs for the same tax year; so if you are still going to be paying into a Stocks & Shares ISA with another provider, you cannot transfer into our ISA). Once money saved in the current tax year is transferred from a Cash ISA to our Stocks & Shares ISA, it is treated as if it had been invested directly into our Stocks & Shares ISA in this tax year. You are able then to still save up to the full remaining balance of your £7,200 annual ISA investment allowance in ISAs in this tax year (including up to £3,600 in a new Cash ISA).

For example - let's suppose you had already paid £3,600 in to a Cash ISA at the beginning of a tax year. You could transfer the whole £3,600 to our Stocks & Shares ISA. You could then save up to another £3,600 into a new Cash ISA (as your old one is treated as gone). Alternatively, you could save another £3,600 into our MPFS ISA (making £7,200 in total in Stocks & Shares ISA), or even split the £3,600 between a Cash ISA and the MPFS Stocks & Shares ISA.

This sounds more complicated than it actually is, therefore if you are considering a transfer please ring us and we will explain it more clearly!

Can I add to the transferred ISA?

Yes, but if your transfer includes any contributions from the current tax year, you must deduct that amount from the maximum you are allowed to contribute. Within that maximum, if you wish to make more contributions immediately, or start making regular payments, please complete the normal application (Form A or Form B as appropriate) and send it to us at the same time as the transfer form.

Can I transfer my ISA to you if I already have your ISA?

Yes, just complete the "Transfer Application Form" (Form C) on its own and send it to us.

How do I transfer?

1. You should complete the ISA transfer application (Form C) and send it to us.
2. We will forward your request in writing to your existing ISA manager.
3. Your existing ISA manager will send a "transfer form" to us, accompanied or followed by the cash being transferred. If the cash being transferred cannot be sent at the same time, your existing ISA manager will advise us when it will be sent.
4. When we receive the money from the existing ISA manager we will send you a Certificate of Membership.