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Our Bonus Plan With-Profits Fund

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Our With-Profits Fund offers medium to low risk investing, aiming for smooth growth over the long-term

When you open a Bonus Plan with us your money will be placed in a tax-efficient account, meaning it will not attract income tax or capital gains tax throughout the term of your investment. When you come to withdraw money from the Bonus Plan at the end of the policy term you will not be taxed on that either.

Your savings are invested on your behalf by our fund manager in an investment fund that is made up of a wide variety of assets, including stocks and shares, unit trusts, bonds, property and cash. Usually the majority of the investment will be placed in stocks and shares with the aim of providing higher returns over the long-term than would be available in a cash-based account.

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Shepherds Friendly With-Profits Fund

The fund that your money is invested in is called our With-Profits Fund. This is a single fund invested broadly across a range of assets, with the aim of producing a profit from which you could be paid annual bonuses to increase the value of your investment.

The value of the annual bonuses you receive will depend on the performance of the With-Profits Fund throughout the period that your money is invested for. Because the value of the assets your money is invested in can fluctuate, we look to even out these fluctuations by applying a process known as ‘smoothing’.

Past performance of our tax-exempt Bonus Plan

Below is a summary of how our tax-exempt Bonus Plan has performed over the course of the last five years, in terms of the bonus that has been paid to our members:

Bonus Plan past performance graph

This chart shows bonuses paid to our members after all charges have been deducted, and is the actual return received. Please remember that past performance is not a guide to how your Bonus Plan could perform in the future, and although we can never take bonuses away once they have been paid, we may not pay one in years when performance is particularly poor.

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The benefits of smoothing

In order to minimise the effects of stock market fluctuations on your investment, and to try to ensure we can always pay an annual bonus to you we use smoothing. In doing this the bonus you receive on your investment may not always directly reflect the fund’s performance over the course of that year. For example, when investment conditions are particularly good and we make more of a profit, we may hold onto some of the profit achieved in that period in order to compensate for future periods when investment conditions are not as favourable. This may mean that in poor investment conditions we are still able to pay a bonus from the reserves we have acquired.

If we hold onto some of the profit in favourable conditions, and they remain strong for the remainder of your investment term, then we may also apply a final bonus to your plan when you take your money.

Unlike some more volatile stocks and shares investments, the value of your Bonus Plan will not fluctuate daily and we will never take away a bonus once it has been paid to you.

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Risks associated with the tax-exempt Bonus Plan

Because our Bonus Plan is invested primarily in stocks and shares there are some risks associated with it, and the annual bonus is not guaranteed. This means that in years when investment conditions are particularly poor we may not pay a bonus into your plan.

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Bonuses applicable to your Bonus Plan

The profit achieved by our With-Profits Fund is used to pay a return on your investment, which will be in the form of an annual bonus, whenever possible. You will receive notification of the value of your annual bonus in you Bonus Statement, and this will depend on how well the With-Profits Fund has performed throughout that year.

Once we have added a bonus to your tax-exempt Bonus Plan we will never take this away again, and every following year the performance of our fund during that year will determine the value of your next bonus.

At the end of your investment term you may also get a final bonus added to your investment, the value of which will depend on how well the fund has performed.

Apply for a Shepherds Friendly plan online and get a Love2Shop voucher code worth up to £50* once you’ve made your first payment into the plan

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What savings plan may best suit your needs?

Discover what options are available to you, whether you're looking to start a savings plan for yourself or a child.

How to open our tax-exempt Bonus Plan: You can open a plan online quickly and securely by clicking the button below:

Alternatively, if you would like assistance in applying or would like more information regarding the plan, you can speak to a member of our customer services team by calling 0800 526 249


IMPORTANT THINGS TO CONSIDER

  • How your investment performs may vary during the term of the Bonus Plan. Because of this you may have a higher or lower lump sum than you expect at the end of the Bonus Plan.
  • If you take your money out of the Bonus Plan during the first few years, you are unlikely to get back as much as you have put in.
  • If you take your money out at any time before the end of the Bonus Plan, you may have to pay to do so. This cost could be more or less than the examples in this leaflet.

All references to taxation are to UK taxation and are based on Shepherds Friendly Society's understanding of current legislation and H M Revenue and Customs practice which may change in the future. For our With Profits plans investment growth is by means of bonuses, the amount of which cannot be guaranteed throughout the term of the contract. Please ensure that you read the full terms and conditions of this plan which are available from your financial adviser or by contacting us directly.