Unit Trust

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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. You can invest on your own or jointly with others.

• How much can I invest?

  Minimum: £50 per month or £2,000 as a lump sum

  Maximum: The maximum you can invest online is £50,000. If you wish to invest more than this, please call us on 0800 056 0563 (free from a landline) to discuss your requirements.

  We’re open 7 days a week:

  Monday to Friday          8am to 9pm

  Saturday                       9am to 6pm

  Sunday                         10am to 4pm

  We look forward to being of service to you.

• How long can I invest for?

  The Unit Trust is open-ended but you should aim to keep your investment for at least five to ten 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 Unit Trust 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 (for the Ethical Fund) and Investment Guide. 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 Unit Trust, 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. 

• What about charges?

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

  • 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.

  Please note that if you move money from your Unit Trust to an ISA, you will not be charged and will not have to pay a new initial charge on the ISA. You should check whether you might incur a capital gains tax charge before you do this, however (see the section on tax below).

• What about tax?

  • The fund pays corporation tax at a rate of 20% on all income received by the fund (except dividend distributions which are exempt from corporation tax).

  • Where the fund makes an interest distribution (Cautious Fund) it will be paid net of 20% tax. Non-taxpayers will be able to reclaim the tax paid from HM Revenue and Customs. Basic rate taxpayers will have no further liability to tax. Higher rate taxpayers are liable for tax at a rate of 40% but will be given credit for tax already paid by the fund. Additional higher rate taxpayers are liable for tax at a rate of 45% but will be given credit for tax already paid by the fund.

  • Where the fund makes a dividend distribution (Balanced, Adventurous and Ethical Fund), it will be paid net of 10% tax. Non-taxpayers will not be able to reclaim the tax credit. Basic rate taxpayers will have no further liability to tax and higher rate taxpayers will have to pay another 22.5% tax, giving a total liability to tax of 32.5%. Additional higher rate taxpayers will have to pay another 27.5% giving a total tax liability of 37.5%
  • When you cash in all or part of your Unit Trust, you may be subject to capital gains tax if your overall gains for the tax year exceed the capital gains tax exemption limit (£10,900 tax year 2013/14).
  • 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 a Unit Trust, this does not entitle you to membership of Teachers Provident Society Limited (our parent company). Please see our range of With-Profits investments if membership is important to you.

• What next?

  • If you would like to apply for a Unit Trust, please click Apply now