Savings and Investment Plan - Your questions answered
Am I eligible for the Savings & Investment Plan?
How can contributions be paid?
How will I know how much my savings or investments are worth?
What if I need to get to my savings or investment or cancel my plan?
Will I be able to increase my contributions?
Will I be able to reduce or stop my savings?
Can I take regular withdrawals from my Savings & Investment Plan?
What are the charges?
What are stakeholder schemes?
Will the benefits of my Savings & Investment Plan be taxed?
How do savings affect eligibility for Social Security benefits?
Am I eligible for the Savings & Investment Plan?
You are eligible if you are aged 16 or over. You can apply in your own name or jointly with a partner.
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How can contributions be paid?
Lump sum investments can be made by cheque or direct credit. Regular savings are collected monthly by direct debit or standing order.
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How will I know how much my savings or investments are worth?
Every year we will send you a statement showing the value of your plan.
You can view current unit prices on our website or by calling our Unit Price Information Line free on 0800 990011.
You should monitor the value of your plan and the level of your contributions to ensure that it is sufficient to meet your goals.
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What if I need to get to my savings or investment or cancel my plan?
You should view your Plan as a medium to long-term investment scheme. However, there is no set term so you can cash-in part or all of your savings when you need to.
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Will I be able to increase my contributions?
We will automatically increase the amount of your regular savings each year to help you keep pace with inflation.
You can make additional increases to your Plan at any time subject to a minimum of £5 for regular savings and £20 for lump sums.
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Will I be able to reduce or stop my savings?
Yes, if you need to you can stop your regular savings at any time. You can also reduce the amount you save.
Reductions are subject to a minimum of £5 and a minimum ongoing saving of £20.
If you wish to cancel the automatic increases, you should tell us at least 14 days before the increase is due.
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Can I take regular withdrawals from my Savings & Investment Plan?
If you invest a lump sum in the Savings & Investment Plan we can arrange for you to take regular part withdrawals. These can be paid on a quarterly, half-yearly or yearly basis.
If you make withdrawals which exceed the growth of your investment your capital will be eroded.
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What are the charges?
The Forester Life Savings & Investment Plan is a medium term stakeholder investment scheme and as such meets the stakeholder standard for ‘capped charges’.
There is an annual charge of 1.5% of the value of the funds you accumulate. If your fund is valued at £250 throughout the year, this means that we deduct £3.75 that year. If your fund is valued at £500 throughout the year, this means that we deduct £7.50 that year. After 10 years these deductions would reduce to £2.50 and £5.00 respectively.
There are no other charges to you.
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What are stakeholder schemes?
Stakeholder products have been introduced to provide a straightforward and low-cost way of investing and saving. In order to qualify as stakeholder, a medium term investment scheme must satisfy Government standards including minimum payments from £20, a range of payment methods, charges of no more than 1.5% pa of fund value (reducing to 1% pa after 10 years) and a risk controlled, shares based investment.
Schemes that meet stakeholder conditions are not necessarily suitable investments for a customer, nor do they offer any guarantee of performance.
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Will the benefits of my Savings & Investment Plan be taxed?
Forester Life is liable for tax on the income and growth of the Fund linked to the Savings & Investment Plan. This takes care of tax liability for most basic rate taxpayers but if you are a higher rate taxpayer when you surrender your Plan, you will be liable to the difference between basic and higher rate tax on any gain.
It is also possible to become a higher rate taxpayer by surrendering your Plan, in which case you will be taxed on some of the gain you have made.
A similar situation can apply if you take a withdrawal from your Plan. However, you are allowed to withdraw 5% of your original investment each year (up to 20 years) without any immediate liability to tax. Any unused 5% allowances can be carried forward indefinitely.
In order to minimise any personal tax liability your Plan will be issued as 1000 identical Plans. Any withdrawals you make will be completed by firstly utilising any unused 5% allowances and, secondly, by fully encashing some of your 1000 Plans to meet your requested amount. This keeps the taxable gain to a minimum and reduces any tax liability that would otherwise apply.
Any profits from cashing in your Savings & Investment Plan could affect your entitlement to Age Allowance if you are aged 65 or over.
Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future.
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How do savings affect eligibility for Social Security benefits?
You can have savings of up to £3000 without affecting your entitlement to social security benefits.
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