Tax Exempt Savings Plans [TESPs]

patientperson

planteria wrote: »

im really busy at the moment, pp. but what i havent been able to establish is whether bonuses are applied to RSPs based upon a Sum Assured which is based upon the total that will be invested, or whether that only applies to TESPs.

In my view NO.

The RSP illustration gives an assured amount and then see below highlights in red. All these plans use the standard growth for illustration of 3%, 5% and 7% .. not guaranteed

Key Features of the Healthy Investment Standard Savings Plan.

http://www.healthyinvestment.co.uk/assets/files/DirectIntro%20StandardSavings-KeyFeatures.pdf

The following portions are copied from the above pdf file.

• To provide a cash sum at the end of the fixed term of the plan that is paid out free of income and capital gains tax.
• To provide a minimum guaranteed payment if the policyholder dies before the policy matures.
• To increase the guaranteed minimum maturity value by adding annual bonuses and a possible additional final bonus.
• To allow you to invest in a mix of stocks and shares, fixed interest bonds, commercial property and cash deposits, through a
traditional With-profits Fund.
Your commitment
• To pay a fixed monthly or annual premium for the full term of the plan.
Risks
• Bonus rates are not guaranteed and could in exceptional circumstances be nil.
• If your circumstances change and you are unable to continue your payments you may receive back less than you have invested
and in the first two years you are unlikely to receive anything.
• Tax rules could change.
• Inflation will reduce what the proceeds of the policy will be able to buy in the future.
Questions and answers
Who should consider this plan?
• Any UK resident up to the age of 65 can invest in a Healthy Investment Standard Savings Plan.
• You might consider this plan if you already have savings in a bank or building society and you are now looking to put some
money in to an investment which includes life cover, has some risk but potentially higher returns and the proceeds of which
are paid tax free.
• You might consider this plan if you have already used your friendly society tax exempt savings plan limit and you want to invest
more in to a similar policy.
• Depending on the term you choose you should see this as a medium or long term investment.
• If you have any doubt whether this plan is right for you, you should seek financial advice.

What might I get back?
• The payment on maturity is made up of the guaranteed minimum amount, or sum assured as we call it, plus any annual regular
bonuses we have added, plus a possible final bonus.
• What the policyholder will receive depends on investment performance, our expenses and other factors, see section 11 of the
Terms and Conditions.
• Your Personal Illustration gives you an example of what might be payable, but it is not guaranteed.
Is life assurance cover included?
• Yes, if the policyholder dies during the term of the plan, then a guaranteed minimum amount, plus any regular bonuses we have
added and a possible final bonus will be paid out.

jimjames

Is there anywhere in writing that shows a TESP having annual bonuses applied based on the guaranteed total not the money paid in at that point in time?

I've not seen anything although it is being referred to here. Or is it a misunderstanding of their T&Cs?

planteria

jimjames wrote: »

So £3k in 2003 would not have the same buying power as £3k in 2013. Just to stand still and beat inflation you'd need a return of 27% over that 10 year period. Bonuses and what they are based on are irrelevant - the total return is what matters.

totally agree. but if the bonuses are based upon the sum assured they are based upon money not yet invested, thereby increasing the potential return. how substantially depends upon the management of the fund concerned, of course.

planteria

thanks pp. even though i am online a lot, i am usually on the phone, so getting chance to really digest is not so easy. i will have plenty of time from next month...got 5 weeks off:)

planteria

jimjames wrote: »

Is there anywhere in writing that shows a TESP having annual bonuses applied based on the guaranteed total not the money paid in at that point in time?

it's a fair question jimjames, and yes, this is how bonuses are paid within (at least some) TESPs.

"Any such allocation is paid in the form of an annual
bonus which is declared generally in April each year.
It is calculated on the Sum Assured not on the
premiums paid during the year. You will receive a
bonus statement each year advising of the amount
of new bonus and current policy value assuming it
runs to the anticipated maturity date."

http://www.kingstonunity.co.uk/products/tax-exempt-saver/

i am surprised that this is how it works. but, if the funds are managed well, even if very conservatively, i think this can be very interesting. hence my query re. RSPs.

planteria

patientperson..
do you receive statements following the end of each tax year for your TESPs?
i will be interested to see how Kingston Unity, Sheffield Mutual, Healthy Investment and Druids Sheffield have done.

planteria

windfalls on the way:

http://www.telegraph.co.uk/finance/personalfinance/savings/9899870/600-windfalls-for-15000-mutual-members.html

the members have voted overwhelmingly in favour:

http://www.marineandgeneralmutual.co.uk/members/egm-2013/

perhaps Carperbagging could be on the way back:)

patientperson

planteria wrote: »

patientperson..
do you receive statements following the end of each tax year for your TESPs?
i will be interested to see how Kingston Unity, Sheffield Mutual, Healthy Investment and Druids Sheffield have done.

Kingston Unity, Sheffield Mutual and Healthy Investment issue statements March/April to the previous year 31st December.

Druids Sheffield do not issue any statement. The amount you will receive is known at plan inception. I have previously stated that my particular policy (Table 20) attracts a 25% bonus at maturity.

planteria

thank you pp. happy with the system that KU, SM and HI operate. will be interesting to see how they have fared in 2013.

the Druids are an unusual bunch:think:

planteria

...but if they yield an MGM-sized windfall, i shan't complain;)