Its aims

To provide:

• An increase to the value of the money that has been invested for the child until their 18th Birthday.
• The proceeds of the investment free of Income and Capital Gains Tax under current JISA rules.
• Children with the opportunity to learn about Financial matters and Investments.

Your investment

• You can invest a single lump sum and/or monthly premiums into a JISA within HM Revenue and Customs limits.
• You or any other family members or friends can make further payments into the JISA up to £3600 a year.
• The account and the money in it belongs to the child, although it is managed by a person with parental responsibility until the child is 16. When children reach 16 they can manage their own JISA accounts.

Risks

• The value of the JISA depends on the future performance of the investments held in the fund and the bonuses we distribute from any profits arising from these investments.
• H M Revenue and Customs may change the tax status of an JISA in the future.
• This plan cannot be cashed in until the child is 18.
• Inflation may affect the purchasing value of the investment in the future.
• Your child may get less than you have paid in. (Please see MVR section for details)

Questions and answers

What is the Shepherds JISA?

A Junior ISA is a new tax efficient account replacing the Child Trust Fund; it is designed for adults to save and invest on behalf of children.

Who can have an JISA?

Any child resident in the UK, who does not already have a Child Trust Fund in place and who was born on or after 3rd January 2011 or aged under 18 but born before September 2002.

How much can I invest on behalf of the child?

The JISA allowance for each tax year can be invested in a Stocks and Shares JISA. You can only have one Stocks and Shares JISA. Currently it has been decided by the Government to limit JISA’s to £3,600 overall.

OR

Your child can also have a Cash ISA with another Provider but the combined total of payments in any one tax year into both JISAs must not exceed the Government’s limit.

OR

You can transfer an existing Cash or Stocks and Shares JISA to Shepherds JISA. If transfering a Stocks and Shares JISA the whole account must be transferred. We do also accept partial Cash JISA transfers to the Shepherds Stocks and Shares JISA.

How do I invest?

You can invest regular monthly premiums and/or lump sum investments to your Stocks and Shares JISA as long as the amount does not exceed the £3,600 limit per tax year.

The minimum monthly premium is £10 a month, which can be increased at any time by a minimum of £10 a month: monthly payments can also be reduced as long as the payment does not go below £10 a month. You will need to make regular monthly premium payments by Direct Debit.

The minimum lump-sum investment is £100, additional lump-sum investments of at least £100 can be made at any time. Lump-sum payments are required to be paid by cheque.

Family and friends can also contribute to the childs JISA as long as the amount invested per tax year does not exceed £3,600.

How will the child’s Investment grow?

We will invest the money in our Profit Sharing Fund, which holds a mix of assets including stocks and shares, property, gilts, bonds and cash. The market values of these assets move up and down over time but such movements are outside our control. These movements may affect how much we add to investments as bonuses.

The aim of the fund is to provide each customer with steady investment growth over the full savings period of their investment. To do this we keep back some of the investment returns we make in good years so that we can pass them on in years when performance is not so good. We add the returns as a yearly bonus.

The amount of bonus paid each year depends on payments received during the year.

Once a bonus has been added to the plan we guarantee to include it in the amount we pay out when the plan reaches maturity. At the end of the plan a final bonus may also be added depending on how the fund has performed.

You can find out more information about how our fund works in our document called “A guide to how we manage our with-profit business” which comes with this document.

What might the benefits be after 5 and 10 years?

Will the child’s investments work out exactly as in the example?

The example we’ve provided is meant to be an illustration of what the investment may be worth. What the child will actually get back depends upon how our investments perform.

The child could get back more or less than this.

Do not forget that inflation could reduce what the child could buy in the future.

What happens if the child dies?

Should the child die during the term of the plan the estate will receive the value of the fund without penalty.

What happens if the child is terminally ill?

The Investment in the Junior ISA may be withdrawn when the terminal illness has been diagnosed. Inside the JISA is a life insurance contract for the child where we will also give an additional benefit equal to the previous tax years premiums paid. If diagnosis is in the first year of the plan we will pay the total premiums paid to date.

How will I be kept informed about my childs JISA?

Each year you will receive a Statement showing the amount and value of any bonus payments, and the total value of the JISA.

How does the child withdraw money from the JISA?

Just before the child reaches the age of 18 we will send them information about their options and how to continue to save or take their money. If we do not hear from them the money will remain in our tax-exempt fund.

The child has the option to transfer the investment to the Shepherds adult Stocks and Shares ISA on receipt of a completed application form.

What happens at age 16?

The child may become the registered contact at age 16, meaning any correspondence will be addressed to the child; they will however not be able to withdraw any money from the JISA until age 18.

Also when a child reaches 16 they can hold both a JISA and an ‘adult’ cash ISA and subscribe up to each individual subscription limit. The subscription limits for all ‘adult’ ISA products apply independently of whether or not a child holds, or has held, a JISA in the relevant year.

How will charges affect the investment and what are the deductions?

Charges are deducted from the investment to cover our expenses and the cost of administering and managing the investments - this is currently 2.5% as an annual management charge.

The last line of the table below shows that over the term illustrated the effect of the deductions could amount to £414.

Putting it another way, this would have the same effect as bringing the investment growth from 7.0% a year down to 4.5% a year.

The last line of the table below shows that over the term illustrated the effect of the deductions could amount to £1040.

Putting it another way, this would have the same effect as bringing the investment growth from 7.0% a year down to 4.5% a year.

What is a Market Value Reduction (MVR)?

If our investment returns have been low we may apply an MVR if the Plan is transferred to another Provider at any time or if the proceeds are held in our Tax Exempt fund for longer than 3 months after the child’s 18^th birthday.

We will not apply an MVR if the child dies at any time or if the child takes the proceeds within 3 months of passing their 18^th birthday and the Plan has been running for more than 5 years.

What if I want to change my mind about opening the JISA?

From the date you open the account you have 30 days in which to cancel the plan and your money will be returned. If you cancel within the 30 days you will be treated as though you had not used the childs JISA allowance and would be able to subscribe to another JISA in the current tax year.

If you cancel the JISA after the 30 days

Once the 30-day ‘cooling’ off period has finished, the Plan becomes a valid Stocks and Shares Junior ISA and cannot be cancelled. If payments are stopped, the Plan would be left dormant until the child reaches the age of 18 or it is transferred to another Provider. You would not be able to open a new Stocks and Shares Junior ISA and leave the Plan dormant with us.

The child would be allowed to open a Cash ISA with any unused allowance.

The amount subscribed is a gift to the child and cannot be repaid if you change your mind after 30 days.

How much will any advice cost?

Your financial adviser (if you have one) will give you details about the cost of advice. The amount will depend on how much you are paying each month and the length of your plan.

Where can I find out more?

Before your plan starts we will send you the full terms and conditions. These explain how the plan works. If you would like to see these terms and conditions before you apply, please contact us:

Phone: 0161 428 1212
Fax: 0161 428 3666
Email: info@shepherdsfriendly.co.uk
Website: www.shepherds.co.uk