Friendly Focus Newsletter

Friendly Financials

2010-02-23T23:00:00.005Z

The Society's accounts will be available in early April which will show that we had a successful year in 2009. In the meantime, we would draw your attention to the following:

New lump sums invested with us exceeded £2.3 million, over 40% up on 2008 – beating all previous years.
Our assets produced a total investment return of over 10%.
Our funds increased from £78 million to £84 million

Your Board places a continuing emphasis on financial strength, as we believe this helps our members to feel confident in saving with us in these uncertain economic conditions. We look to spread our investments both widely and wisely. We increased our exposure to commercial property at the end of 2009, using a number of unit trusts – all of which went to an early profit. The star performers in 2009 were UK Equities and Corporate Bonds.

Our strong performance, aligned with the Board’s decision to enhance pay-outs, has served to increase the returns to our members. These are listed on our website under ‘With Profits/Past Performance’. As an example, a lump sum invested 10 years ago has grown by 75%. If it had been placed in an ISA, the growth increases to 83%.

Extra 1% Extended Offer

2010-02-23T21:00:00.002Z

The Society is extending its extra 1% large lump sum offer to include ISA transfers of any amount. You can transfer both Cash ISAs and Stocks & Shares ISAs into our ISA.

Income Protection - our new deal

2010-02-23T13:00:00.002Z

Regular monthly income is payable for the whole time you are on half pay or no pay

We have added lump sum benefits when you first go on to half pay and again on to no pay

Regular monthly income in medical retirement until age 60 if you are retired for a physical (not mental)condition or until you are able to get alternative work

We have added a lump sum benefit when you find a new job

Lump sum benefit of 6 months’ pensionable pay for critical illness. 23 conditions are covered – full details from the policy document on our website

We have written to all existing members covered for Income Protection. They have been upgraded automatically where it is clearly in their interest, but still need to be underwritten for the critical illness benefit in some cases. Members with older policies (1997 to Sept 2002) can apply to switch. They will gain the above benefits but will be giving up the possibility of medical retirement benefit for mental or nervous conditions.

Merger Talks End

2009-10-15T11:02:00.000Z

For most of 2009, the Friendly Society has been in talks with Police Mutual about a possible merger.

The original proposed terms encouraged us to go public with an announcement at the end of February, and we updated our members in May and July. To meet the timetable required both sides to agree terms by early July – but even extending this deadline did not enable the parties to conclude terms which each felt was in the interest of its membership.

By the start of September, it was clear that we could not proceed with the Special General Meeting planned for 14 October, and that it was virtually impossible to meet the target merger date of 1 January 2010. Your Board weighed up the terms then on offer, considering the interests of members and other stakeholders in the Society, the views expressed at our consultation meeting in May, and the time and resources required to focus on the merger instead of on business development. We concluded that it was not in our members’ interests to proceed with the merger.

Returning Capital To Our Members

2009-10-15T11:01:00.000Z

Our capital is the amount by which our assets exceed our liabilities. For many years, we have had more than sufficient capital to run the business. We have used some of that capital to top up the investment return that we credit to our members – effectively increasing our liabilities whilst still retaining a sufficient
surplus to run the business.

If the merger had proceeded, we were proposing to return the remaining capital to members in 2 ways – a one-off windfall payment and increased pay-outs on savings and investment contracts. Now that the merger has been ruled out, our intentions are a little different. We will continue to top up the investment return (for so long as we can do so safely); and we will increase the pay-outs beyond current levels – to give 2 examples

A jump of about 3% for 5 year plans maturing in 2010,
A jump of 5% for with-profit bonds cashed in after 10 years.

We will retain more capital in the fund than if we had proceeded with the windfall payment. That will enable us to maintain a higher exposure to the equity market. Historically that has been the source of the best investment returns; and recent market movements suggest that equities are now in a recovery phase.

Increasing our Membership

2009-10-15T11:00:00.002Z

We have had a good year for new business. Overall it is up on 2008 and we have achieved outstanding results on lump sums invested in our ISA - already £1.3 million in 2009 against £0.7 million in the whole of 2008. We hope that the new ISA limits will enable us to build on this success.

We have welcomed more new members than last year and are pleased that many of our new members come from recommendations and to encourage this further we have introduced a member-get-member incentive. Introduce a new member - whether they be colleagues or a close relation - and you will both get a Bobby Bear.

Membership of the Friendly Society is open to the wider Police Family (click here).

Please remember that even in retirement you can continue investing with your Friendly Society.

Even if you are not listed above, please give us a call because you still may be able to become a member.

Great deals on your large investments

2009-10-15T10:57:00.000Z

Are you wondering how to invest your commutation or tax-free lump sum? Or do you have an inheritance looking for a good home? The Friendly Society can help.

At the moment, we are offering 101% investment for lump sums in excess of £25,000. This can be shared with your partner – you do not have to invest it all in one name.

To make the best possible use of your ISA allowance we can help you spread the investment over 2 or more tax years. The money you put into a With-Profit Bond can be re-invested in an ISA next spring including the bonus earned in the meantime – with no early surrender penalty (normal penalty would be 1% before the first anniversary).

In this way, you and your partner can tax shelter over £40,000 of your lump sum in the space of a few months. If you want to invest more, then it can be spread over a longer period.

Photo Competition

2009-10-15T10:55:00.000Z

Building on the success of last year’s photography competition, the Society, in association with the Metropolitan Police Photographic Society (MPPS), ran an enhanced competition this year.

The competition was open to everyone in the Police Family, and with four subject categories: ‘Four Seasons’, ‘Landscape’, ‘London Scene’ and ‘Policing’.

There was something for everyone and a much greater chance of winning. Prize money totalling £2,000 was awarded, divided between 1st, 2nd and 3rd in each of the four categories.

We included an additional sum for the overall winner, who this year was Mrs Emma Durnford with her ‘Winter Robin’. Emma said of her win “I was surprised and delighted as this is the first competition that I have won for my photography and this is a hobby that I am now striving to pursue on a more professional basis”.

All the winning images can be viewed via the competition page of our website, plus keep an eye out there for details of next year’s calendar competition.

Passing Out Parades

2009-10-15T10:50:00.013Z

Not only have officers been passing out at Hendon, Bobby Bear has too. By kind invitation of the Management at Hendon Training School, staff from the Society have been on parade promoting the CVOC and Bobby has been marching off with officers families after a suitable donation.

To date over £4,000 has been raised for the charity.

2009-10-15T10:31:00.008Z

Throughout 2009 the Society has continued to support the excellent work carried out by the charity Child Victims of Crime (CVOC), offering Bobby Bears to all our members, subject to a charitable donation being made to the CVOC in return.

Dominic Chambers, Manager of the CVOC had this to say ”As the only National Police Children's Charity, founded by the British Police Rugby Section, Child Victims of Crime are very happy with our link with the Metropolitan Police Friendly Society; the efforts of the Friendly Society staff, and the generosity of its members has helped to ensure we continue to support children whose lives have been affected by crime by giving help and practical, material assistance to the most vulnerable and helpless victims of crime. We believe that the Society's efforts, especially its attendance at Hendon passing-out parades, has raised the profile of both our organisations to our mutual benefit.”

We still have a large number of caramel or brown bears; should you wish obtain one for a charitable donation this can be done by either visiting our website or phoning the Society directly.

Do you want a 2010 Calendar?

2009-10-15T10:23:00.009Z

For many years the Society has provided free wall calendars to members of the Metropolitan and City of London police services. They have proved to be extremely popular with over 6,000 copies being distributed annually. However, with time comes change and as wall space in many locations is at a premium these days the decision was taken a few years ago to introduce an alternative desktop version.

Last year we distributed nearly 10,000 calendars. Like this year’s, the 2010 calendars will feature the 12 winning images from our annual photography competition and we will be sending every Society member with a valid work address their own personal copy of the desktop variety.

If you do not receive one, or you would like to order more, or a wall calendar, these can be requested for free. Please click here to reserve your copy.

If you have already placed an order, please do not submit further requests, they are being collated and the calendars will be despatched as soon as they are in stock.

ISAs - The Rules Explained and the New Limits

2009-10-15T09:02:00.000Z

There are 2 types of ISA – a Cash ISA, and a Stocks & Shares ISA (our ISA is one of these). ISAs include former TESSAs and PEPs.

In any tax year (ending 5 April), you can save in both types of ISA, but must stick to one provider for each.

You can save a maximum of £7200 (old limit) each tax year between these ISAs, but only a half of the maximum (£3600) can go into the Cash ISA.

If you do not use the limit, you cannot carry it forward to the next tax year.

If you cash in your ISA, you cannot reinvest it later. This applies equally to the current year’s subscription.

You can transfer ISAs to a new provider, but you cannot switch a Stocks & Shares ISA into a Cash ISA. For old tax years, there is a lot of freedom – but the“one provider” rule affects the current year.

The overall limit is going up next April 6 to £10,200 (but only £5,100 in a Cash ISA).

If you are age 50 or over on 6 October (or reach 50 by 5th April 2010), then you benefit from the increase this year. But beware the one provider rule!

The MPFS ISA

2009-10-15T09:01:00.006Z

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”.

Notting Hill

2009-10-15T09:00:00.000Z

For the last three years, we have attended the Operational Feeding Centre at the Notting Hill Carnival, to promote the work of your Society.

This year we gave out a competition flyer and this proved very popular with many entries being received on the day. More importantly interest was also generated in the Society’s products and we received numerous requests for brochures, including many for our ever-popular 5-year plan.

The vast majority of these requests came from nonmembers, proving this event was an excellent way to raise the profile of your Society and generate the new business on which your Society depends.

Hendon Talks and FSA Money

2009-10-14T10:32:00.002Z

As part of our marketing programme, the Society has been delivering talks to all the intakes of student officers at Hendon. Our talks provide information on the police pension scheme and the many benefits of becoming a member of the Society, through our income protection, savings and investment products. These talks have been taking place throughout the year and provide the perfect opportunity to introduce new officers to the Society. For our police staff colleagues, the Society attends the Marketplace at the Corporate Induction Days, held at Empress State Building.

A number of our staff have also been trained by the Financial Services Authority (FSA) to deliver their ‘Making the most of your money’ presentation. This presentation is being rolled out across all police services and the Society has had the opportunity to deliver the presentation to Met. officers at training days on a number of boroughs. The presentation encourages individuals to take control of their finances and to regularly review theiroutgoings, something that is very important in today’s financial climate.

Interesting Times

2009-03-29T12:21:00.001Z

You could be forgiven for thinking that putting your cash under a mattress is not that different from trusting it to a bank! Certainly you will be lucky to earn anything on your cash in a bank. But you will be safer in a bank. No individuals have lost out from the UK banks that fell victim to the credit crunch. Statutory protection has been increased to £50,000 (£100,000 for joint accounts), but normal practice is for depositors to be rescued – for example, savers with Bradford and Bingley were switched to Abbey (part of the large Banco Santander group).

Interest rates continue to fall. Many rates have already plunged to rock bottom for savers. Current accounts sometimes pay interest but those deals are hardly worth having now. Expect banks to look for more ways to charge for ordinary banking. It rarely pays to stay loyal to your bank; so shop around for the best deals available.

The recession is the reason for low interest rates. Low rates help those with mortgages and discourage us all from hoarding cash. To the extent that we spend, we help business.

You might even want to pick up a property whilst they are cheap, but you will need a good deposit (20%+)for starters. There is now a huge reluctance for the banks to lend unless they are safe from a fall in values, and they can see that you have the income to service the loan comfortably.

Other investments may have more appeal whilst the return on cash is so low. It is a good idea to spread your investments, and there are various ways of achieving this – even if you only have a small lump sum. Our with-profits fund is amongst these and has about 40% of its assets in government bonds, 40% in equity funds and the rest mainly in investment-grade corporate bonds and commercial property.

Our ISAs are intended for the longer term investor – but they are flexible and can be cashed in at any time. If you are prepared to risk the markets, our ISA could help you build up the deposit on a house!

We do more

2009-03-29T12:15:00.000Z

The Society not only provides with-profits savings plans and lump sum investments – it also provides insurance policies: for example to pay off your mortgage if you or your partner dies, or to provide income if you are off work and your pay is reduced or stopped due to long-term sickness. This year, we have cut the cost of mortgage protection policies and added lump sum benefits to the income protection policy (see ‘Income Protection - our new deal’ inside).

As a Friendly Society, we are owned by our members – there are no shareholders. We do not go in for high-pressure selling – our talks at Hendon and elsewhere are designed to explain finance generally, and the benefits that go with the Job in particular.

Moving with the times

2009-03-29T12:07:00.000Z

It is a rapidly changing world. We have been doing our best to keep members abreast of events. As well as mailing our newsletter to everyone, we now have display boards in nearly 200 locations around the Met. Here you can pick up our latest accounts, newsletter and details of all our products. Or you can get all these on Aware (under F for Friendly!) or our public website www.mpfs.org.uk.

Income Protection (are you covered)

2008-08-17T20:43:00.014Z

Most people recognise the need to insure their lives, especially to cover their mortgage and other major borrowings. Like many employers, the police service provides a valuable death-in-service benefit. Those with access to the Police Federation’s group cover can add to their life cover on attractive terms. Normally, the only reason to look beyond these 2 group schemes is when you buy a house. You probably want to take out personal life cover for the mortgage debt, and include your partner.

(view full article)

Most people recognise the need to insure their lives, especially to cover their mortgage and other major borrowings. Like many employers, the police service provides a valuable death-in-service benefit. Those with access to the Police Federation’s group cover can add to their life cover on attractive terms. Normally, the only reason to look beyond these 2 group schemes is when you buy a house. You probably want to take out personal life cover for the mortgage debt, and include your partner.

But a much greater risk is being long term sick – far more likely than dying during your working life. As a nation, we are very bad at covering this risk – and police are no exception. Of course, employers will cover you in the shortterm – but not many extend this cover to the longer term. In the police service, you are liable to be placed on half pay after 6 months’ sickness, and no pay after a further 6 months. With no prospect of a recovery, medical retirement will follow – an enhanced pension, but still a considerable loss of income.

In 1997, following the introduction of Regulation 46 (now Reg 28), MPFS launched its Income Protection Plan. This is also known as Permanent Health Insurance – “Permanent” because our cover continues throughout your working life (unless you choose to cancel it). It paid out 60% of your loss of income until age 55 – that age limit is now 60. The benefit is not liable to tax.

Since that time, our claims experience has improved – largely due to the increased use of recuperative duties. We have passed the saving in cost on to our members by reducing premiums and improving benefits. We have added a critical illness benefit of £15,000 that pays out on major medical conditions, such as heart attacks, strokes and diagnosis of serious cancers. The only way in which we have tightened the cover since launch is to exclude stress and mental conditions after medical retirement.

We are now improving the benefits further. Up to three months’ pensionable pay will be paid as additional lump sum benefits as you progress onto half pay, and then no pay, and in medical retirement when you gain alternative employment. We are also improving the income paid out prior to medical retirement – e.g. you will receive 60% of insured pensionable salary during the no pay period, with no reduction for any state benefits. the income paid during medical retirement will be modified and will no longer reduce as your pension goes up.

Whilst we are in general keeping our premium rates unchanged, we have had to review our charges in the light of the EU gender directive. Income Protection claims for females are significantly higher than for males, and we must rely on national statistics published for the purpose of the directive. This will mean a 20% increase to the premium we charge for females commencing January 2009, when the improved benefits are introduced.

Finally, under our Jubilee year promotion, there is up to 3 months free cover. For policies underwritten in October to December, cover is provided immediately on acceptance, but there is nothing to pay until January. So, if you need cover, why wait?).

The mutual dividend

2008-08-17T20:41:00.003Z

The Friendly Society is owned by its members – there are no outside shareholders. We have accumulated capital over the years to enable us to run the with-profits fund, in particular to invest in equities whilst guaranteeing a minimum pay-out under our savings plans. Our pay-outs nowadays are closely based on what you pay in and the return on our funds (after meeting our
expenses and tax liabilities).

But the capital we have accumulated has grown to the point where we can plough some of it back into pay-outs. We will keep this under review, but we have already committed over £2 million to this purpose, enough to lift the investment return to our members by 1% per annum over the life of their plans to date.

Hedge Funds

2008-08-17T20:28:00.012Z

The name “Hedge Fund” was never meant to be racy – these funds aim to return a positive absolute return year on year by hedging away the risks. They aim to beat the return on cash by a similar amount to equities, but with more steady growth. In this sense, they strongly mirror the objective of a with profits fund.

(view full article)

The name “Hedge Fund” was never meant to be racy – these funds aim to return a positive absolute return year on year by hedging away the risks. They aim to beat the return on cash by a similar amount to equities, but with more steady growth. In this sense, they strongly mirror the objective of a with profits fund.

The core investments for most with profits funds are government bonds and UK equities – and ours is no different. Other investment classes tend to have drawbacks that limit the proportion of our fund we would want to commit to them – but they provide welcome diversification – vital for spreading risks and smoothing returns. If we had too much in equities, then the pay-outs to our members would fluctuate from year to year by more than we would like.

However, last year, the usual alternatives to UK equities did not appeal. Overseas equities were not the answer - markets around the world tend to follow each other, with the US leading the way. Commercial property looked overpriced. Corporate bonds were paying a very small premium compared to similar bonds guaranteed by the UK government - this was before the market had woken up to credit risk.

So we started to look seriously at hedge funds - or rather funds of hedge funds. Again it is all about spreading risks, so

• we will only put a small part of the fund in this sector (currently we have less than 5%, but we could go up to 10%)
• we will only use funds of funds
• we will spread our investment between different funds
• we will avoid funds that go tend to up and down with the equity market

Tax Exempt Savings Plans

2008-07-25T11:19:00.006Z

Friendly Societies are generally no different from other mutual insurance companies, but they have one particular tax privilege...

(view full article)

Friendly Societies are generally no different from other mutual insurance companies, but they have one particular privilege. Qualifying savings contracts for up to £25 per month are tax privileged in the same way as ISAs and Child Trust Funds (“CTFs”). No tax is paid on the investment income generated (although dividend tax credits cannot be reclaimed).

To qualify, the savings contract must run for 10 years, and include a small element of life insurance. For a plan taken out with us 10 years ago, the £3,000 saved has grown to about £4,120 – without the tax break, it would only be £3,960. (Past performance is no guide to future returns.)

Taking out a savings plan with a Friendly Society does not prevent you from taking out an ISA in the normal way. Adults can choose between a 10 year plan where they have the option to leave the money in for further growth, or a longer plan which pays out on the chosen maturity date (which must be before attaining age 65, or 60 for smokers). Children can have Friendly Society plans as well as CTFs – ours is available up to age 15, so includes children born before the CTF came in (September 2002). The plan runs through to age 25 but can be cashed in at age 18 or 21 if it has been running for 10 years. Until age 18, the premiums are paid by the child’s sponsor who can be a parent, grandparent or other relative. The £25 premium limit applies to the child, not the sponsor.

Autumn 2008 Friendly Focus Newsletter

2008-07-24T12:09:00.000Z

Spring 2008 Friendly Focus Newsletter

2008-07-24T11:37:00.004Z

Looking after you!

2008-07-24T11:17:00.021Z

(view full article)Our spring newsletter went out to members with their revamped bonus notices and included a Q&A section on bonuses.That newsletter also explained the changes to ISAs, and we include a summary of key points in this issue. We were delighted that so many of you started an ISA or transferred your existing ISA to us.

.....We are regulated by the Financial Services Authority (“FSA”). The FSA are increasingly reverting to regulating through principles rather than detailed rules. A key principle is “Treating Customers Fairly” or TCF. As a mutual Society, owned by our members, we never forget we are here to serve YOU.
Many of the initiatives we have undertaken over the last couple of years, like our review of the bonus notices and the accompanying breakdown of premiums, have been aimed at the needs of our members – and these have been helpful in demonstrating our commitment to TCF.

All our products are now explained in attractive jargon-free brochures. We are trying to get these into all the main places of work – please let us know if you do not have ready access to them, or if your supply is running low.
We are pointing out to our members that they remain eligible for our products after they retire or leave service.
We have allocated over £2 million of our capital to enhance with-profit pay-outs

Information about products, bonuses and much more is given on our publicwebsite and on the MPS intranet (“Aware”)

We are spreading our assets more widely, to reduce the amount that pay-outs fluctuate from year to year.

We keep our protection products under review – both the benefits we offer and the price we charge

We are seeking the opinions of our members, and now write to all new members

Our everyday Insurance range has expanded well beyond Travel – we now also cover home and motor with online quotes, and there is a helpline – 0845 362 7288 for a wider range of products.

We are trying to confirm the addresses of our retired members and to trace them where they are out-of-date. Please let us know if you move house – even if we write to you at your work address. If you are retired andhave e-mail, please e-mail us with your current contact details.