Savings Schemes with Friendly Societies

jimjames

kidmugsy wrote: »

We've had several over the years. The only one that was really successful was a Child's Plan from the Ancient Order of Foresters FS: not only was the return good, but they gave our daughter a small bursary when she went to university - enough to be helpful for book purchase.

But you may have done even better putting the money somewhere that didn't have the extortionate charges and lock ins that these policies commit you to.

I would be extremely wary of committing to any policy where I HAD to pay for 15 years at a fixed rate when you have no way of knowing your circumstances in future.

MCGONIS

Hello. I took out one of these 10 year plans with the UK Civil Service Friendly Society, which merged with Homeowners Friendly which became Engage Mutual. I have been paying £20 a month for 8 years. In this time I have accrued £102.02 in bonus. The previous two years there has been no bonus declared. It has two more years to go. By the time it matures I will have paid £2400. So in these two years I would need to get about £300 in bonus just to break even. I doubt that I will. Even with the terminal bonus that may be added.

I would have been better putting £20 a month in a bank savings account. Least then I would get back what I had paid in! I don't see the point in these savings plans. Steer clear is my advice. Hope that helps someone considering them in the future.

Loughton_Monkey

Many of us remember the 'old days' where Life Insurance was sold by little men from the Prudential and Co-Operative who rode their bicycles around the estates (typically council) collecting 1 shillings and 6 pence a week for various little 'endowment policies'. Whilst these brought savings to 'the masses', their small premiums, and high costs meant they were very poor value.

Well in fact neither of the two companies mentioned were 'Friendly Societies' but there were hundreds of little Friendly Societies around who tried to compete with these 'giants'. Usually without success.

Looking in the 'back rooms' of these Insurance Companies (Friendly Societies) at the time, you would find the most quaint 'Dickensian' offices, full of cobwebs. Hand written ledgers. Quill Pens. And if there were a customer paying more than 15 shillings a week, it was sure to be the Director's wife.......

Now most of these companies have long since modernised heavily, and a large number have been swallowed up and ceased trading. Those very few that remain tend to carry the old 'penny' culture with them, and have legislative backing for 'favourable' tax treatment but for piddling amounts.

Friendly Societies remain (a few of them) and possibly fill a gap at the extreme lower end of the premium spread, but do not have the 'mass' to be cost efficient or to employ specialist high-rolling Investment Managers.

Premium Bonds are tax free. That does not, however, change the fact that the average payout is the most derisory amount.

I recently discovered such a Friendly Society product in the hands of my Brother. I only mention this because of anonymity here because otherwise this is not information I would ever impart due to the huge shame it brings upon my family. I instructed him to cash it in immediately (which he did), having produced him a 'wonderful' 1.9% growth per annum over the last 20 years.

kidmugsy

A friend has an ISA with a Friendly Society - Druids of Sheffield, or some such name. He swears by it.

EarthBoy

kidmugsy wrote: »

A friend has an ISA with a Friendly Society - Druids of Sheffield, or some such name. He swears by it.

I've been considering taking out one of these stocks and shares ISAs. Are S&S ISAs from Friendly Societies better than their traditional savings schemes, or would I be better off with an S&S ISA from somewhere else, e.g. a bank?

dunstonh

EarthBoy wrote: »

I've been considering taking out one of these stocks and shares ISAs. Are S&S ISAs from Friendly Societies better than their traditional savings schemes, or would I be better off with an S&S ISA from somewhere else, e.g. a bank?

Banks are typically the worst distribution for S&S ISAs. Friendly Society ISAs tend to be very limited and expensive. You should consider whole of market distributions (DIY or IFA effectively)

A friend has an ISA with a Friendly Society - Druids of Sheffield, or some such name. He swears by it.

Possibly because he doesnt know any better?

Loughton_Monkey

kidmugsy wrote: »

A friend has an ISA with a Friendly Society - Druids of Sheffield, or some such name. He swears by it.

Probably compulsory to swear allegiance.

Chetan

I am not sure if this will work or not but I think you should refer this link (www. moneysavingexpert.com/savings/best-cash-isa). It will explain you every details about ISA.

dunstonh

Chetan wrote: »

I am not sure if this will work or not but I think you should refer this link (www. moneysavingexpert.com/savings/best-cash-isa). It will explain you every details about ISA.

That is about cash ISAs.

This thread is about Friendly Society plans (and later in the thread about S&S ISAs)