Your Questions Answered
Please see below answers to some of the most commonly asked questions about our long term tax free savings plan - the Tax Exempt Savings Plan.
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About the Tax Exempt Savings Plan
What is the Tax Exempt Savings Plan?
The plan is a tax free unit linked savings plan and is a way of investing over the long term. The money that you invest in this plan is invested in a fund which is free of tax on both income and capital gains, although dividends earned on the equities within the fund will have been taxed at source and cannot be reclaimed. Contributions must be made for at least 10 years.
The plan also provides life cover.
For further information on Tax please see the relevant section in the Tax Exempt Savings Plan Key Information Document and Important Information.
Who can take out a Plan?
You can take out a plan as long as you are aged between 16 and 74 inclusively and a UK resident. You cannot hold more than one tax exempt plan with POIS or any other friendly society.
What if I already have a NISA?
A Tax Exempt Savings Plan can be held in addition to any other tax free plans, such as a NISA.
What are the charges?
Charges are deducted from the value of your plan to pay for the cost of managing the fund, administering the plan and to cover the costs of setting up the plan.
Does the plan include life cover?
Although the plan does not protect against the financial consequences of death, for the plan to qualify for its tax exempt status, life cover is included up to a maximum amount of £2,250.
If you wish, you can nominate a beneficiary to receive the value of your plan if you die. They can receive up to £5,000 immediately following your death. This can be done without having to wait for your estate to be administered, which can often be a lengthy process at a difficult time. Any excess would become part of your remaining estate and have to wait for probate.
Payments into the Plan
Can I pay a lump sum into the plan?
It is not possible to make a lump sum payment into the POIS Tax Exempt Savings Plan. Regular contributions can be made monthly by Direct Debit, or if your employer allows you can pay contributions weekly or monthly through deductions from your pay.
Where is the money invested?
When you invest money in the TESP you are purchasing units within the POIS Flexible Growth Fund. The aim of the POIS Flexible Growth Fund is to achieve long-term growth, whilst spreading risk across a wide range of investments.
For more information on the fund and investments please see the POIS Flexible Growth Fund tab in the Fund Information section.
What is a unit?
The value of the fund is divided into units. The price of each unit is based on the value of the fund, divided by the number of units in issue. Every contribution you make will buy a certain number of units. The number of units bought will depend on the price of those units on the day the units are bought. The value of the investment is calculated by multiplying the number of units held by the current unit price.
The price of the units may go down as well as up and you may get back less than you have paid in.
What happens if the plan is cashed in early?
If the plan is cashed in before its 10th anniversary, a charge will be deducted before the cash sum is paid to you. The amount of the charge will depend on how long you have held the plan, as shown in the table below.
In the early years, it is possible the plan value may be less than the surrender charge due. In that instance, no plan value will be paid out and no further charge will be payable. You may be liable for tax on any growth.
For further information please see the section on 'Tax' in the Tax Exempt Savings Plan Key Information Document and Important Information.
What happens if I stop paying?
If your salary deductions stop or are suspended, or your Direct Debit is cancelled, you should contact us immediately to discuss your options.
If you stop making contributions, life cover will cease, so, if you die, the only payment made will be the value of the plan. You do however, have 13 months to pay the missing contributions, altogether in one lump sum, and continue paying into the plan. If, at the end of the 13 months, you have not made up the missing contributions the following will apply:
What happens if I die?
If you were to die the value of the plan or, if higher, the life cover will be paid. This will normally form part of your estate and may be subject to Inheritance Tax, depending on your individual circumstances.
Returns on the Plan
What happens at the end of the term?
You have three choices:
If the plan hasn't already been cashed in, it will end on the plan anniversary before your 85th birthday.
How much could I expect to receive?
The figures below compare potential cash sums at three different growth rates for a Tax Exempt Savings Plan for £25 per month for 10 years, which apply no matter how old you are.
You will receive a specific illustration when you receive your plan documents.
Each year shortly after the anniversary of the plan we will send a statement showing the plan's current value.
The plan also includes maximum life cover of £2,250.
If you have any questions, please contact us on 0800 622 417 or at firstname.lastname@example.org.