The MPFS ISA

Our ISA is modelled on our With-Profit Bond, which has been running successfully since autumn 1994 – the original Bonds have grown by 170% over 15 years. But because of the tax privileges we add higher bonuses annually to the ISA. So, over the last 10 years, whilst a Bond has grown by 66%, a lump sum ISA has grown by 75%. We spread our investments, and that has helped us to achieve these good returns – despite two major crashes in the equity markets in the last 10 years.

Because our with-profit fund is invested in a range of assets, including shares, it can rise or fall in value. So, in the early years, we reserve our rights to pay out less than you paid in. This means our ISA is classified as a Stocks and Shares ISA (as distinct from a Cash ISA). So if you have already saved in an ISA with a Building Society, even the maximum amount permitted for a Cash ISA, you can still save with us.

We have had to reduce our pay-outs when equity markets have plunged, but we are not adjusting pay-outs at the moment – in contrast to many shareholder owned funds. As a mutual set up to provide for the police service, avoiding the use of brokers, we strive to avoid such “market value reductions” wherever we can. When ISAs were launched in 1999, we only provided a lump sum ISA, but for many years now we have welcomed monthly contributions as well as lump sums – or a mixture (subject to the limits).

Investing on a regular basis helps you avoid the problem of market timing. Investing in a with-profit fund allows you to avoid putting “all your eggs in one basket”.