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Key Features of the
COMPASS SAVINGS PLAN
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Its Aims
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To enable you to save regularly in the Society's
tax-exempt fund.
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To provide you with a tax-free lump sum payable at the end of a selected term of years.
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To provide you with guaranteed life cover.
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Your Commitment
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You agree to pay regular monthly or yearly premiums for a minimum of 10 years.
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Risk Factors
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The Bond proceeds at the end of the premium paying term or on encashment at any other stage
cannot be guaranteed as the return depends on the performance of the underlying investments.
The value of the savings Plan can fall as well as rise.
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The expense deductions may be higher than expected.
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Your circumstances may change and you may have to stop paying premiums. If the Savings Plan
is encashed within the first few years it is unlikely to pay back as much as you have put in.
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An Example
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An adult, currently aged 30, saving £25 per month for 15 years.
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What might you get back at the end of the Savings Plan term?
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If investments grew at 5% a year, you would receive £5410
If investments grew at 7% a year, you would receive £6320
If investments grew at 9% a year, you would receive £7390
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These figures are only examples and are not guaranteed - they are not minimum or maximum amounts. What you will get back depends on how the investments grow and on the tax treatment of the fund.
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You could get back more or less than this.
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All friendly societies use the same rates of growth for illustrations but their charges vary.
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Do not forget that inflation would reduce what you could buy in the future with the amounts shown.
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Your Questions Answered
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What is the Compass Savings Plan?
It is a tax-exempt unit-linked regular premium whole of life policy with premiums payable for
a fixed term of at least 10 years. (See also the
section below headed "Taxation").
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How much am I allowed to invest?
Currently, the government restricts the amount that each individual can invest in a tax-exempt
friendly society policy to £270 per annum, if premiums are paid
yearly, or £300 per annum if premiums are paid more
frequently than yearly (ie £25 per month). If you already have a tax-exempt
friendly society policy, a lower premium may be allowed.
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How do I pay the premiums?
Premiums are normally payable monthly or yearly by standing order.
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How will the premiums be invested?
Premiums will be invested in the Compass Equity Fund with the objective of long term capital growth
through stock market investment. The Fund is divided into units which are allocated to the
Plan according to the premium paid after charges. Investment expertise is
provided by Mellon Fund Managers Limited (formerly Newton Fund Managers Limited) and currently the
Equity Fund's assets will be invested in shares in the Newton Managed Fund and the Newton Income Fund
which invest to achieve capital growth and income from a portfolio of UK, EU and international securities.
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How do I keep track of the value of the Savings Plan?
We will send you an annual statement of units allocated to the plan together with the
current unit price. If you require any information at any other time,
please contact the Society.
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What happens if I stop paying premiums?
If less than one year's premiums have been paid, the plan will have no value. Thereafter,
the policy may be encashed for the value of the units allocated to it, calculated at the next
valuation date. Alternatively, the Plan may be made paid-up
provided the value of units exceeds £500.
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What happens if I die?
A sum assured will be paid equal to the greater of 75% of the total gross premiums payable
throughout the premium paying term of the plan (but excluding any premiums payable after age 75)
or the value of the units allocated to the plan.
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How will charges and expenses affect my investment?
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The charges made on the Savings Plan illustrated are as follows :-
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An initial charge of 25% of the first year's premiums.
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An annual investment management charge of 1.5% of the value of the fund to which the plan
is linked plus Trustee, audit and other charges, currently totalling 0.16%. Where the fund
invests in unit trusts or OEICs, any management and other charges made by the
unit trust or OEIC managers will be offset against the above charges.
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£1.00 per month administration fee deducted from the plan's value.
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A charge for life cover will be deducted monthly from the Plan's value. The cost
of the life cover is determined by the Society's actuary - the rates vary
according to age and may be changed from time to time.
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The effect on a Savings Plan investment of £25 per month assuming growth of 7% a year is set out below.
These figures are not guaranteed, and serve only to demonstrate the effect of
charges and expenses on an investment.
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Warning
If the plan is cashed in during the early years you could get back less
than the premiums paid in.
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At
end of
year
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Total
paid in
to
date
£ |
Total
actual
deductions
to date
£ |
Effect
of deductions
to
date
£
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What
you
might
get back
£
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THE EARLY YEARS
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1 |
300 |
95 |
95 |
216 |
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2 |
600 |
115 |
122 |
521 |
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3 |
900 |
142 |
157 |
843 |
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4 |
1200 |
174 |
200 |
1180 |
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5 |
1500 |
211 |
252 |
1530 |
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THE LATER YEARS
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10 |
3000 |
497 |
676 |
3620 |
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15 |
4500 |
982 |
1500 |
6320 |
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What are the deductions for?
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The deductions include the cost of life cover, commissions,
expenses, charges, any surrender penalties and other adjustments.
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The last line in the table shows that over the full term of
the plan the effect of the total deductions could amount to £1500.
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Putting it another way, leaving out the cost of life cover,
this would have the same effect as bringing the investment growth from 7% a
year down to 4.4% a year.
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How much will the advice cost?
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This illustration assumes that you will not seek the advice
of an independent financial adviser and therefore does not allow for the payment
of commission.
If you are in any doubt about the suitability of the
Savings Plan, you may wish to consult an independent financial adviser. Unless
the adviser charges you a fee, commission would probably be payable and this would be reflected
in the amount invested in your policy and the benefits would reduce accordingly. A
revised illustration would be provided on request.
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Further
Information
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Cancellation Rights
After your proposal is accepted you will receive a notice of
your right to cancel. You will then have 30 days in which you can change your
mind. If you cancel, you will receive a full unconditional refund.
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Taxation
The benefits payable at maturity or on
earlier
death are free of all UK income and capital gains tax. If the policy is
surrendered within three-quarters of the premium paying term or 10 years if
earlier some UK income tax may be payable (depending on your personal tax
circumstances).
The fund in which premiums are invested is free from taxes on
income and capital gains, with the exception of tax deducted from dividends on
shares.
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Compass Friendly Society Limited
Compass Friendly Society Limited is registered and
incorporated in England under the Friendly Societies Act 1992. It is a mutual
organisation owned by its members. By investing in a Savings Plan, you become members of the Society. The Head
Office is at Old Bank House, 59 High Street, Odiham, Hampshire RG29 1LF, United
Kingdom. The Society is authorised and regulated by the Financial Services Authority and is a
member of the Financial Services Compensation Scheme.
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Queries and Complaints
For further information or if you wish to complain about any
aspect of the service you have received, please contact Compass Friendly Society
Limited. If your complaint is not dealt with to your satisfaction you can then
complain to the Financial Ombudsman Service (South Quay Plaza, 183 Marsh Wall, London E14
9SR, Telephone 020 7964 1001).
Making a complaint will not prejudice your right to take legal proceedings.
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Membership of a Friendly Society
Membership is subject to the Rules of the Society which may
be varied from time to time. The Financial Services Authority monitors all such
amendments, as well as the financial strength of societies and has a statutory
duty to protect the interests of all members.
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Cashing in the Policy
The
Savings Plan may be encashed at any time by sending the policy
document to Compass Friendly Society Limited along with an appropriate letter
requesting the surrender.
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General
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Law
In legal disputes the Law of England and Wales will apply.
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Compensation
Information on compensation is available from Compass
Friendly Society Limited on request.
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Please Note
This leaflet is based on our understanding of current law and
Inland Revenue practice, which may be subject to change.
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This leaflet provides a guide to the key features of the
Compass Savings Plan. Full details are contained in the Terms and
Conditions which form part of the legally binding contract between the members
and Compass Friendly Society Limited, copies of which are available on request.
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