Tax-Exempt Savings - Key Features
Additional Information
Its aims
- To provide a tax-free lump sum at the end of the term.
- To provide a death benefit during the term.
- To provide a guaranteed minimum benefit - the Sum Assured.
Your commitment
- You agree to save a regular monthly sum by salary deduction or direct debit throughout the agreed term (10 years only for Whole Life Plan).
Risk factors
- Your circumstances may change, forcing you to cash in early.
- If you cash in or stop paying premiums in the early years, then you may not get back as much as you pay in.
- Our charges may be higher than illustrated.
- What you get will depend on investment performance - returns may be lower than illustrated.
What is an MPFS Savers' Tax-Exempt Plan?
- It is a tax-efficient savings plan designed to shield your savings from income and capital gains taxes. The premiums are invested in the Society's with-profits fund. This is a method of providing you with access to a fund, where your money is pooled with others and all customers share in the investment return. Bonuses may be added to your contract, which once applied cannot be taken away
How flexible is it?
- The minimum term for these types of policy is 10 years; you should therefore see them as long term savings plans.
When can I take money out?
- When the Endowment Plan reaches the end of its chosen term you will receive the maturity value; the Whole Life Plan on the other hand does not mature so you will need to request the value. You can surrender either policy early if you need to - however, there may be tax implications if you choose to do so.
An example - What you might get back after 10 years for a monthly premium of £25
- If investments grew at 5% a year - after 10 years, you would get back £3,580
- If investments grew at 7% a year - after 10 years, you would get back £3,970
- If investments grew at 9% a year - after 10 years, you would get back £4,400
The early years
Warning - if you cash in during the early years, you could get back less than you paid in.
Assuming that investments will grow at 7% per year.
| At the end of year | Total premium paid in to date £ | Effect of deductions to date £ | What you might get back £ |
|---|---|---|---|
| 1 | 300 | 36 | 275 |
| 2 | 600 | 68 | 575 |
| 3 | 900 | 99 | 900 |
| 4 | 1,200 | 179 | 1,200 |
| 5 | 1,500 | 144 | 1,640 |
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 | 3,000 | 320 | 3,970 |
What are the charges?
- The deductions include the cost of expenses, charges, any surrender penalties and other adjustments. They are best estimates based on current experience.
- The last line in the table shows that over a ten year period the effect of the total deductions could amount to £320.
- This would have the same effect as bringing down the investment growth from 7.0% a year to 5.7%.
Where is my premium invested?
- The premiums we collect from with-profits members are pooled together into our with-profits fund. The fund is invested in a mix of equities, commercial property, UK government bonds, corporate bonds and cash. By spreading the fund between the various investments the Society is not solely dependent on one market. For instance, if the value of the stockmarket were to go down but other investments go up, then the effect would be that one cancels out the other.
What about tax?
- See the 'Introduction' and 'Will I lose my tax benefits' sections of the Savers' Tax- Exempt Plan brochure
What happens to my plan if I die?
- The value of your plan including any bonuses added will be payable to your estate. The sum will not be less than the sum assured.
How will I know how my plan is doing?
- We will send you a bonus notice every year, showing you the bonuses that have been earned.
Can I change my mind?
- Yes, see the 'What if I change my mind' section of the Saver' Tax-Exempt Plan brochure.
How do I contact you?
How to complain
- If you wish to complain about any aspect of the service you have received, in the first instance you should contact the Metropolitan Police Friendly Society Ltd (our contact details are inside the front cover of this booklet).
- If the complaint is not dealt with to your satisfaction, you may contact the Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR or visit their website www.financial-ombudsman.org.uk.
- Making a complaint will not prejudice your right to take legal proceedings.
Law, Terms and Conditions
- In legal disputes the law of England and Wales will apply.
- Full details of the plans are contained in the Society's Rules and Tables - which evidence the legally binding contract between you and the Society.
- If you you start one of these plans, you will be issued with a Certificate of Membership, which will contain the individual details specific to you (Plan number, monthly premium, sum assured and term).
Compensation
- Information on compensation arrangements is available from the Metropolitan Police Friendly Society Ltd.
- Your investment will have the security provided by the Financial Services Compensation Scheme.