Individual Savings Account (ISA)

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• Am I eligible for this plan?

  Yes – if you’re aged 18 or over and are a resident in the United Kingdom.

• How much can I invest?

  Minimum: £50 per month or £2,000 as a lump sum
  
  Maximum: The maximum you can invest in ISAs in the current tax year (2013/14) is £11,520. Of this, you can invest up to £5,760 in a Cash ISA and the remainder in a Stocks & Shares ISA. Alternatively, you can invest the whole £11,520 in a Stocks and Shares ISA.

  Our ISA is a Stocks & Shares ISA.

• How long can I invest for?

  The ISA is open-ended but you should aim to keep your investment for at least 5 to 10 years to give it the best chance of overcoming the impact of the initial charges and establishing itself. You could get back less than you paid in, especially if you cash in your ISA in the early years.

• How will my money be invested?

  Our research told us that teachers are too busy to trawl through vast numbers of funds to decide on an investment. So, we’ve put together four funds to reflect our customers’ most common requirements:

  • Cautious
  • Balanced
  • Adventurous
  • Ethical

  After charges (see below), your money will be used to buy units in one (or more) of these funds. Unit prices can go up and down so if you’re investing on a monthly basis, you might get more units in some months than in others.

  The aim of our funds is to obtain steady long-term growth. This means investing in a range of equities (company shares), Government Bonds, Corporate Bonds and cash. Not all of our funds invest in all of these types of asset.

  To see where each fund aims to invest specifically, please read the Simplified Prospectus (for the Cautious, Balanced and Adventurous Fund) or the Key Investor Information Document and Investment Guide (for the Ethical Fund). You can find these documents in Step 2.

• How risky is it?

  When choosing where to save or invest your money, it is important to weigh up the amount of risk you are prepared to take, in return for a potential reward.

  Generally, the greater the potential reward, the greater the risk of capital loss. The reverse is also true. The lower the potential reward, the lower the risk of capital loss.  For the avoidance of doubt, ‘capital loss’ means you get back less than you paid in.

  Each of our funds is matched to one or more of our risk profiles and is awarded a number of little mountains. We call these the Risk Rockies. The more Risk Rockies you see, the rockier the potential ride could be with this type of investment!  One Risk Rocky is awarded for very low risk investments and five for the highest risk investments.

  For more information on risk and reward, please read our booklet entitled Guide to savings and investment risk and reward. 

  	Low Risk	Cautious Fund You are willing to take low levels of risk. You are prepared to accept the potential for a relatively modest amount of capital growth or income in return for the greater security of your money. You understand that you could lose money on a Low Risk investment.  The Cautious Fund typically invests up to 20% in equity markets (company shares) and the remainder in gilts, corporate bonds and cash.
  	Medium Risk	Balanced Fund You are willing to take a moderate amount of risk. You accept that there will be fluctuations in the value of your investment and that you may need to remain flexible about when to cash in your plan.  You understand that you could lose money on a Medium Risk investment.  The Balanced Fund typically invests up to 60% in equity markets (company shares) with the remainder in a combination of gilts, corporate bonds and cash.
  	Higher Risk	Adventurous Fund You are willing to take a higher level of risk. You accept that fluctuations in the value of your investment will be commonplace and that you need to remain flexible about when to cash in your plan. You understand that you have a greater chance of losing your money than with a Low Risk or Medium Risk investment.   The Adventurous Fund typically invests up to 90% in equity markets (company shares) with the remainder in a combination of  corporate bonds and cash. This fund carries a significant currency risk.
  	Higher Risk	Ethical Fund * You are willing to take a higher level of risk. You accept that fluctuations in the value of your investment will be commonplace and that you need to remain flexible about when to cash in your plan. You understand that you have a greater chance of losing your money than with a Low Risk or Medium Risk investment.    The Ethical Fund typically invests 100% in equity markets (company shares). This fund carries a significant specialist investment risk

  * The Ethical Fund is called a UCITS fund. This means it is a fund that can be marketed in all countries in the European Union. UCITS stands for Undertakings for Collective Investments in Transferable Securities.

  Because of this, we are also required to provide you with the rating of the Ethical Fund on a scale called the Synthetic Risk and Reward Scale. This scale has a range of 1 to 7. Our Ethical Fund is a level 6 on this scale, which means it is classed as high risk with typically higher rewards. The scale is based on historical data, taken from the preceding 5 years. It may not be a reliable indication of the future risk profile of the Fund. This rating does not change where the Fund appears in our own Risk and Reward scale. 

• What will I get back?

  When you cash in all or part of your ISA, you’ll get back the value of your plan, i.e. the number of units held multiplied by the unit price on the day the plan ends.

  If you die before the plan ends

  • If you die before the plan ends, your estate will get the value of your plan, i.e. the number of units held multiplied by the unit price on the day the plan ends.
  • Please note that ISA tax advantages are lost on death and your investment will become a Unit Trust until it is cashed in.

• What about charges?

  The charges we deduct from your plan help cover our operating expenses in setting up and administering your ISA:

  • Initial charge – we take an initial charge of 3% of each premium you pay into the plan.

  • Annual management charge – we take an annual management charge, which is variable. Currently this is 1.25% per year of the fund’s value for the Cautious, Balanced and Adventurous Funds and 1.5% for the Ethical Fund.

  If you choose to obtain a personal illustration (see Get a quote), you’ll be able to see the effect of these deductions on your potential return.

• What about tax?

  • The fund is free from both income tax and capital gains tax (except for the tax deducted from dividend income which cannot be reclaimed).
  • The proceeds from an ISA are free from income and capital gains tax. Tax may be payable on death.
  • This information is based on our current understanding of HM Revenue & Customs rules, which may change in the future and depend on individual circumstances.

• What about membership?

  • Sorry, but when you take out an ISA, this does not entitle you to membership of Teachers Provident Society Limited (our parent company). Please see our Guaranteed ISA if this is important to you, as that is a membership product.

• What next?

  • If you would like to apply for an ISA, please click Apply now