The end of the transition period between the United Kingdom and the European Union is fast approaching. If you’re a Shepherds Friendly member wondering how Brexit’s next stages will affect your investment or insurance plan with us, here’s what you need to know.
In 2019, Brexit was a hot topic of discussion – but, this year, COVID-19 has taken centre stage. Despite everything this challenging and turbulent period the pandemic has presented us with, Brexit discussions have certainly still been underway.
Now, as the transition period is fast coming to an end, the United Kingdom is preparing for the as-yet unknown outcome that will follow the final negotiations. Whether we face a new deal or no deal, we want to assure our members that Shepherds Friendly’s operations will remain largely unaffected.
Hasn’t Brexit Already Happened?
The United Kingdom officially left the European Union (EU) on 31st January 2020. However, at this point, an 11-month transition period began, the aim of which was to allow sufficient time for both parties to agree a suitable deal. During this period, the UK has still been subject to the EU’s regulations.
As the year comes to a close on 31st December 2020, so does the transition period. The new UK-EU relationship, however that may look, will begin on 1st January 2021. Negotiations regarding a deal are still ongoing and have reached a crucial point.
How Will This Affect Shepherds Friendly?
Shepherds Friendly has been around for nearly 200 years. We couldn’t have got this far without knowing how to adapt and evolve regardless of what’s happening in the world. As such, we have gained valuable experience of managing our members’ finances through varying economic conditions.
As we operate solely in the UK, how we conduct business on a day-to-day basis will continue as normal. We are anticipating little to no impact on our operations following the end of the Brexit transition period, even if EU regulations change.
Just in case you needed any extra piece of mind, we are still and will continue to be part of the Financial Services Compensations Scheme (FSCS). This means that your investments with us are fully protected, as well as our insurance and protection plans.
Is my Investment at Risk?
Our investment strategy has one aim: to protect and grow your savings over the medium-to-long term. The actions we take in order to manage your investment plan with Shepherds Friendly help us to do this – these include:
- Actively managed fund: We invest your premiums in a pooled With-Profits fund, which is primarily invested in the Royal London Multi Asset Strategies Fund (MAST). In times of market volatility, Royal London will actively manage the fund in order to try and protect its investors and mitigate the effects of any sharp falls in the market
- Smoothing: This is where we hold back some bonuses from years where the fund has performed particularly well, so we can still aim to provide a bonus in years when the markets aren’t performing as strongly.
- MVRs: An MVR, or Market Value Reduction, is another way we ensure fairness and protection for all of our members. It is a deduction from the total value of your investment, made upon withdrawals carried out during times of significant market volatility. Due to the way we manage your money, this deduction is likely to be less than any potential loss from a higher risk investment. It ensures that members withdrawing from or cancelling their plan during times of poor economic performance do not receive more than their fair share of the fund. Therefore, ensuring that the profits are distributed fairly amongst those members making withdrawals and those remaining invested.
These techniques, amongst others, have allowed us to pay our investment members a bonus for the past 17 years. It also means that we are prepared to manage any changes in the market that an official and finalised Brexit may bring.
Will Protection Products or Claims Be Affected?
No. Our protection products such as our Over 50s Life Insurance and Income Protection plans will remain unchanged. Members with existing plans will remain covered in line with the terms and conditions of their policy.
As we expect business to continue as usual, we anticipate no impact to the way we manage and process claims.
Will My Fixed Rate Bond Change?
Your 5 Year Fixed Rate Bond will remain unaffected. Your rate is always guaranteed and, as with our other investment products, is fully covered by the FSCS.
What if I Live Abroad?
We are aware that some of our members are British ex-pats living abroad. If this applies to you, please be assured that you will be contacted accordingly if any changes to regulations and legislation are agreed that may impact your plan with us. Right now, there’s nothing you need to do.
Any Other Questions?
If you require further information regarding how Brexit will affect your plan or if you have any general questions about your plan with us, please do get in touch:
0800 526 249