Friendly Financials

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

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

• 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

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

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

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

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.