Tax-Free Savings Plan
This plan enables you to invest regular monthly amounts, tax free, in our Unitised With-Profits Fund, which aims to provide long-term growth.
It also includes a valuable life assurance amount that pays out if you die before the plan matures.
Due to a little publicised tax concession*, you can invest £25 per month with a Friendly Society, like Teachers Assurance, in addition to your ISA allowance to build a nest egg for the future.
You simply select a term of between 10 and 25 years over which to save.
Because we know that teachers don’t normally like taking too much risk with their money, the Tax-Free Savings Plan is designed to take the sting out of the inevitable ‘downs’, while enabling you to benefit from the ‘ups’.
Whatever happens to the value of your investment, as long as you pay all your premiums throughout your chosen term, we guarantee you will at least get all your money back.
As this plan can invest in stocks and shares, its value can go down as well as up, during the plan term. If you cash it in early, you may not get back what you have paid in.
*The tax advantages of such plans could change in the future and depend on individual circumstances.
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What type of savings plan is this?
This plan provides a disciplined way for you to invest regularly, over the longer term.
You simply invest £25 each month, by direct debit, for a term of between 10 and 25 years.
Your monthly premiums, after charges, are invested in our Unitised With-Profits Fund ("the Fund"). For details of where this Fund can invest, please see the section below entitled "How do you invest my money?".
At the end of the term, the plan matures and you will receive a tax free lump sum.
Please note that as a mutual friendly society, we have no shareholders to pay so all our profits are used to benefit our members.
Investing in this Fund means that after 3 months you will become a member, which qualifies you for other special membership offers too and, after 3 years, enables you to vote on various issues at our Annual General Meeting.
For further information about how the plan works, please read our Tax-Free Savings Plan Key Features Document.
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How do you invest my money?
The Unitised With-Profits Fund can invest in a range of assets including equities (company shares), fixed interest bonds (government and company), index linked bonds, property and cash. How much you get back will depend on the length of time you hold your investment, the types of asset held in the Fund and how well these assets perform.
The mix of assets may change over time. During periods of turbulence in economic and investment conditions as seen in periods such as 2000-2003 and 2008-2009, we may take a relatively cautious approach to investment by holding more of the Fund in cash and government bonds. We do this to protect the interest of our members who invest in the Fund and to reduce the ups and downs in comparison to holding a larger proportion of equities in the Fund.
Our target level for equity and property investment is 60% of the Fund as, over the longer term, equities are generally considered to provide the best opportunity for investment returns. The investment performance of the Fund and the overall return you can expect depends on the mix of assets held over the lifetime of your plan.
The chart below gives the asset mix of the Unitised With Profits Tax Exempt Fund as at 31st December 2011.
(Figures have been rounded)
Target Position
The chart below shows our long-term, target asset mix for the Fund (60% invested in equities and property in total):
(Figures have been rounded)
Want to know more?
To find out more about the current mix of assets and how the With-Profits Fund works, please go to the Unitised With-Profits page.
Alternatively you can download a copy of our Guide to how we manage our With-Profits Fund (Unitised).
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How risky is it?
All of our savings and investment plans are given a risk and reward rating, to help you choose something that you feel comfortable with. Here’s how our Tax-Free Savings Plan rates:
Your attitude to risk Product risk profile Volatility 2 or 3 (Cautious / Balanced) Low to medium Low to medium This means that you:
- You are only willing to take low levels of risk. You are prepared to accept the potential for only a small amount of capital growth for the greater security of your money. You understand that you could still lose money on a “Low Risk” investment.
- You understand that Teachers Assurance regard a “Low Risk” investment as one which typically invests:
- Up to 20% in equity markets (company shares) and the remainder in Gilts, Corporate Bonds and Cash or;
- Up to 60% in equity markets (company shares) and property with the remainder in Gilts, Corporate Bonds and Cash, but also carries a money-back guarantee on a set date (conditions apply).
To find out more about Risk and Reward, go to our Risk and Reward page or download our Risk and Reward leaflet. Printed copies are also available on request.
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How does my investment grow?
There are two ways that your investment can grow:
Via Unit Prices
Each month, your premium, after charges, buys units in the Fund. The price of these units will depend on how well the underlying assets in the Fund perform.
The lower the unit price, the more units your premium purchases and vice versa.
The value of your investment on any given day will depend on the total number of units you have and the unit price on that day.
The plan includes some very important safeguards in the event that unit prices are low at or near the end of your plan term. See the section entitled "What could I get back?" below.
Via Mutuality Bonuses
Each year, we review how well we have done in all aspects of our business. As well as the potential for growth in your units from our With-Profits business, we may also add bonus units to your plan if we have made a profit in other aspects of our business.
These are known as mutuality bonuses. Although we cannot guarantee to pay these every year, once we have added a mutuality bonus to your plan, this will boost the number of units you hold and therefore your plan’s value.
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How will I know how my investment is doing?
You will receive an annual statement that tells you how many units you have and how much they are worth.
You can track unit prices via our Fund Prices page (See the Tax-Free Savings Plan section).
You can also monitor your plan’s progress via our My Plans facility, which allows you to check on your investment, securely online.
Alternatively, you can call our Helpline on 0800 056 0563.
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What could I get back?
When your plan matures, you will get back the best of the following 3 options:
Option 1 - Cash Value
This is the number of units you hold multiplied by the unit price on the day your plan matures. We cannot guarantee how much this will be, but here are some example returns.
Based on a female investor aged 29 with a regular premium of £25 per month over 10 years:
Illustrated Return 4.25% 6.25% 8.25% Guaranteed Amount Premium £25 per month £3,200 £3,530 £3,900 £3,000 These figures are not minimum or maximum amounts. What you will get back depends on how your investment grows and the tax treatment of the investment. The example rates of return shown here are lower than the standard rates that we would normally use to illustrate potential returns. This is to reflect the current mix of assets in the Fund and current investment conditions.
Option 2 - Smoothed value
To protect you from falls in unit prices towards the end of your plan term, we calculate a smoothed value of your units at maturity.
This is the number of units you hold, multiplied by the average unit price in the last 2 years of your plan. If this is higher than your Cash Value, you will receive this value instead.
Option 3 - Guaranteed Amount
As a further protection, whatever happens to the value of your units, you are guaranteed to receive back a return of your premiums at your chosen maturity date.
To benefit from this important safeguard, you must have paid in all your premiums, throughout the plan term.
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What are the charges?
The following table gives an example of the effect of deductions. The figures relate to a female age 29 at the start of the Plan saving £25 per month for 10 years.
The Early Years
At the end of year Total paid in to date Effect of deductions to date What you might get back 1 £300 £172 £137 2 £600 £208 £431 3 £900 £246 £743 4 £1,200 £286 £1,070 5 £1,500 £330 £1,420 The Later Years
At the end of year Total paid in to date Effect of deductions to date What you might get back 10 £3,000 £598 £3,530 You should be aware that if you cash in your Tax Free Savings Plan during the early years you could get back less than you have paid in. The last two columns assume that investments will grow at 6.25%.
The rates of return we have assumed here are lower than the standard projection rates supplied by the Financial Services Authority and we have done this to reflect the current investment conditions.
We have also assumed that the same rates of return will apply throughout the whole time you save in the Tax Free Savings Plan. The actual returns could vary significantly from one year to the next. What you get back will depend on the actual returns achieved.
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What happens if I die?
The plan includes a valuable life assurance benefit, the cost of which is paid for from your plan charges.
Should you die before the end of the term, the plan will pay out the greater of:
- A sum equal to what you would have paid over the plan term, for example, £3,000 for a 10 year savings plan or
- The current value of your plan.
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Why choose Teachers Assurance?
Started in 1877 by teachers - for teachers.
15,000 teachers a year in 3,000 schools in England and Wales turn to us for financial direction. (And that's excluding other teachers who phone in or email us.)
No one understands the financial needs of teachers better than us.
As a mutual friendly society our business is built on helping teachers to:
- Protect themselves and their families
- Save for the future
- Invest efficiently
- Get the most suitable advice
- Make confident financial decisions
To find out more about how we treat our customers go to the following page:
- About us - See who we are and what you can expect from us.
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What if I need your help or advice?
If you need our help or advice, please give us a call:
0800 056 0563
8.30am to 8pm Weekdays
9am to 1pm SaturdaysTo help us continually improve customer service, calls may be recorded or monitored.
Ask us for information
Our Helpline can answer any questions you have or post you an application pack for any of the products on offer.
Ask us for advice
Our expert Financial Consultants can help you choose the most suitable products for your needs, you can ask for personal financial advice over the phone or face to face .
Ask us for a school visit - Money Talks!
Book a school visit for one of our Financial Consultants to hold a free financial planning session for teachers in your school.
Our Consultants are only able to advise on our own products and services and those of selected third parties.
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How do I apply?
If you’d like to apply online, you can do so quickly and securely. There are two easy steps:
Step 1
Read the Key Features document and the Guide to how we manage the With-Profits Fund (Unitised). These outline the commitment you will be making and the risks of the plan. They will also give you information on how the Fund works, how bonuses are calculated and the charges.
Tax-Free Savings Plan Key Features Document
Guide to how we manage our With-Profits Fund (Unitised)
Step 2
Click here to Apply online
Important Note
None of the information on our website should be considered advice to save, invest or purchase. If you are in any doubt as to whether a product is suitable for you, please ask us for advice. We are able to advise on our own products and those of carefully selected third party providers.
