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Key Features
- With-Profit Bond
- Aims, Commitment & Risks
- Questions and Answers
- Other Information
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Apply
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Additional Information
- How We Manage the With-Profit Fund
- Contact us for further information
Questions and Answers
Why should I read this document?
The Financial Services Authority is the independent financial services regulator. It requires us, the Metropolitan Police Friendly Society, to give you this important information to help you decide if this product is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference.
What is an metfriendly With-Profit Bond?
It is an investment plan for a lump sum, which has no fixed term, and is invested in the metfriendly With-Profits Fund. Annual bonuses are added each year and a final bonus may be added on cashing-in. There is a choice of plans - one pays an income of 5% at the end of each policy year, the other does not; both allow the value of the bond to be claimed at any time. You can invest in as many bonds as you wish, and there is no maximum limit to your investments.
Who can take out a Bond?
To invest with us, you must be over the age of 18 and you must work or have worked in the police service - or be the partner or close relative of someone who does.
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.
Can I cash in part of my bond?
You can only cash in a Bond in its entirety. However, we will split large investments into individual Bonds of £5,000, and you can ask us to issue Growth Bonds down to £1,000 if you need that flexibility.
How does the With-Profit Bond work?
- You invest a lump sum (minimum £1,000 for Growth Bonds - £5,000 for Income Bonds) with the Society.
- At the end of each calendar year, we add a bonus 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.
- You can choose at outset to take income payments of 5% on each anniversary - which are deducted from the lump sum and bonuses.
- Provided you invest for at least 3 years, we normally add a final bonus when you cash it in.
- The Bond 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.
Where is my money 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 at 31st December 2007. For more information on how the with-profits fund works, please refer to the "How we manage the with-profits fund".
- Equities 44%
- Government Bonds 36%
- Commercial Property 8%
- Corporate Bonds 7%
- 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.
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, we guarantee that the plan value will never be less than the premiums you paid in plus all bonuses (less the regular income payments already made to you, where applicable).
How do I apply for a Bond?
Please make sure you read all the details about this plan - and fill in the appropriate application form (Form A - for Police Officers or Police Staff, Form B - for partners or relatives). For partners or relatives who are new members, Form B should be accompanied by reasonable proof of identity (Copy Birth Certificate, Driving Licence or Passport). Send it to us with your cheque to cover your chosen lump sum investment.
What happens if I die?
Your premiums and all bonuses will be paid to your estate. On the Income Bond version, we will deduct from this any annual income payments already paid out.
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 might I get back on the Growth Bond?
An example - What you might get back after 10 years for a lump sum investment of £10,000:
- If investments grew at 4% a year - you would get back £13,500
- If investments grew at 6% a year - you would get back £16,400
- If investments grew at 8% a year - you would get back £19,800
The early years
Warning - if you cash in during the early years, you could get back less than you paid in.
| At the end of year |
Total premium paid in to date |
Effect of deductions to date |
What you might get back |
|---|---|---|---|
| 1 | £10,000 | £245 | £10,300 |
| 2 | £10,000 | £513 | £10,700 |
| 3 | £10,000 | £584 | £11,300 |
| 4 | £10,000 | £667 | £11,900 |
| 5 | £10,000 | £761 | £12,600 |
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 | £10,000 | £1,470 | £16,400 |
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 £1,470.
- This would have the same effect as bringing down the investment growth from 6.0% a year to 5.1%.
- The charges, expenses and other deductions used are best estimates based on current experience.
What might I get back on the Income Bond?
An example - What you might get back after 10 years for a lump sum investment of £10,000 and income payments of £500 each year:
- If investments grew at 4% a year - you would get back £7,740
- If investments grew at 6% a year - you would get back £10,000
- If investments grew at 8% a year - you would get back £12,700
The early years
Warning - if you cash in during the early years, you could get back less than you paid in.
| At the end of year |
Total premium paid in to date |
Total income paid out to date |
Effect of deductions to date |
What you might get back |
|---|---|---|---|---|
| 1 | £10,000 | £500 | £245 | £9,850 |
| 2 | £10,000 | £1,000 | £501 | £9,700 |
| 3 | £10,000 | £1,500 | £568 | £9,750 |
| 4 | £10,000 | £2,000 | £642 | £9,790 |
| 5 | £10,000 | £2,500 | £725 | £9,830 |
The later years
| At the end of year |
Total premium paid in to date |
Total income paid out to date |
Effect of deductions to date |
What you might get back |
|---|---|---|---|---|
| 10 | £10,000 | £5,000 | £1,290 | £10,000 |
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 £1,290.
- This would have the same effect as bringing down the investment growth from 6.0% a year to 5.0%.
- The charges, expenses and other deductions used are best estimates based on current experience.
How much will it cost for advice?
- We do not make any form of commission or incentive payments.
- The cost of providing verbal or written information about this contract is included in our overall expenses.
What about tax?
- We pay tax at the basic rate (currently 20%) on our investment income and capital gains.
- The profit you make will be free of tax if you are a basic rate tax payer at the time of encashment.
- Higher rate taxpayers will pay tax on the profit (20% at current rates).
- The income payments, if chosen, will be treated as a return of capital (for the first 20 years).
How do I find out the value of my investment?
You will receive a bonus notice every March. We will be happy to advise you of an up-to-date value on the telephone, on proof of identity.
How do I contact you?
Is it suitable for me?
If you are unsure as to the suitability of these products, and wish to obtain personal advice, you should contact an independent financial adviser.