Everything you need to know about your annual bonus

Last updated: January 2024

At Shepherds Friendly we offer a range of tax-efficient savings plans for the whole family. These include a Stocks and Shares ISA that any adult can open, and a Junior ISA, which can be opened by a parent or legal guardian for their child.

The main aim of all of these plans is to grow your savings at a faster rate than you would achieve in a cash-based account, by investing in a range of assets, which include stocks and shares, property, gilts, and bonds.

Therefore, when the investment performs well, we aim to add a boost to your savings, which we do by paying you a bonus. With any Shepherds Friendly savings plan, there are two types of bonuses that we aim to pay, a ‘quarterly bonus’ and a ‘final bonus’:

What is a Quarterly Bonus?

This is where we aim to pay out a bonus to our members each quarter (once every three months, four times a year) depending upon how the investments have performed. The bonus can change quarterly due to the daily ups and downs in the market, and it’s important to remember that there is no guarantee that one will be paid. However, we do aim to steady your investment journey through ‘smoothing’ which simply means that if our With-Profits fund performs well, some of the profits are retained so that we can still aim to pay a bonus when market conditions aren’t as good.

What is a Final Bonus?

This is the bonus that we aim to pay when a plan comes to the end of its term and matures. Like all the bonuses we aim to pay, it is not guaranteed and is paid if there have been more good times than bad in relation to market conditions throughout the term of the investment.

What will my bonus rate be?

With our ISA and Junior ISA, we have been able to pay bonuses every year since the plans began. However, past performance cannot be taken as a guarantee that your ISA will continue to perform well in the future, and although we will never recall bonuses once they have been paid, we may not pay one following periods of poor investment performance. The reason for this is that the fund in which your savings will be invested includes a wide range of assets, from stocks and shares and property to government and company bonds.

What is smoothing?

Smoothing simply refers to the technique used in With-Profits investments where we actively manage your money to even out, or ‘smooth’, the daily ups and downs in the market.

It also means that if an investment does well, we hold onto some of the profits. This protects your funds in the future, so if the market isn’t performing well, we can then use the previously held profits to support your investment and lower the impact this has on your plan.

This allows us to consistently pay a bonus, which we’ve been able to do every year since our ISA launched in 2008. It’s important to remember that a bonus isn’t always guaranteed and your capital is at risk.

How do I check my bonus?

You can check the value of your savings anytime by simply logging in to view or manage your investment on Shepherds Friendly website or via the mobile app. Information regarding your most recent bonus will be found can also be found by logging in. If you don’t already have a log-in set up, then you can register today by following these quick and easy steps:

1. Register online: Click here to confirm your personal details and begin the registration.

2. Confirm your email address: You will receive an email from us asking to confirm your email address by clicking a verification link.

3. Confirm your mobile number: We will send a text message containing a six-digit PIN code, which you need to enter when you register. Each time you log in we will send you a new code to enter, which helps keep your log-in secure.

4. Confirm your home address: We will then send you a letter to your home address, with an eight-digit verification code. You only need to enter this the first time you log in.

5. Start using your log-in: Once you have your letter from us, you can complete the registration process.

If you have any questions, please contact our Member Services team through our online form: https://www.shepherdsfriendly.co.uk/help-and-support/

Please note: As of January 2024 we have updated the bonus payment schedule to every three months (quarterly) instead of once a year. See our quarterly bonus FAQs for more information.