Foresters a head start in life Child Trust Fund
Making the most of the Child Trust Fund The Financial Services Authority is the independent financial services regulator. It requires us, Forester Life, to give you this important information to help you decide whether our Child Trust Fund is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference.
To give your child a real financial head start you should invest for the best long term return. After all, a Child Trust Fund is an investment until your child’s 18th birthday and all monies are locked in until that time. Bank and building society accounts offer security and a safe haven for short term savings but do not have the potential of shares for good long term growth. That’s because returns are based on the performance of the underlying investments which have historically proven better returns than you might expect from a savings account.
Of course, past performance should not be seen as an indication of future performance and the value of shares can go down as well as up. That’s why it is important to choose a fund that balances the ups and downs of the stock market through a good spread of investments. And who better to select for your Child’s Trust Fund than Foresters. We don’t have shareholders and we champion the well being of families, sharing our financial strength with our members across the United Kingdom, United States and Canada.
Is the Forester Life Child Trust Fund right for you? The Forester Life Child Trust Fund is designed to provide your child with a lump sum benefit at age 18. Through investment in Foresters Stakeholder Managed Fund 1 it offers good long term growth potential without undue risk, and meets stakeholder standards for low charges and risk-controlled investment. However, this does not guarantee that there can never be a loss of value or that a stakeholder scheme is necessarily the right investment for you.
Giving your child a head start
Once you’ve opened an account you can add in regular monthly and/or single payments at any time. That way your child can look forward to a great start to adult life. Grandparents and Godparents can also contribute - in fact anyone, even your child, can make regular or one off payments to the Plan. And, with subscriptions allowed from as little as £10, the Forester Life Child Trust Fund is ideal for investing birthday and Christmas money from friends and relations. All subscriptions are gifts to the child and cannot be reclaimed by the donor. All payments build up in your child’s Plan without liability to any capital gains or income tax. This can be a considerable advantage over the longer term for which this Plan is designed. Because of the generous tax concessions, the Government place a limit of £3,600 on the total amount which can be invested each subscription year. The first subscription year runs from the date the Plan is opened to the child’s next birthday. Thereafter each subscription year runs from one birthday to the next. Each year we will send you a statement showing the amount invested and the current value of the Plan. That way you can keep track of all the payments received and see how the fund is building up. The total fund is payable to your child at age 18 as a lump sum, providing a valuable financial asset which can be spent or reinvested as your child wishes.
Dedicated investment expertise By investing with Foresters, you have access to the services of a vastly experienced team of professional fund managers who make all of the day-to-day investment decisions regarding our funds. Supported by dedicated research and expert financial analysis, they are able to invest your money in a spread of investments for excellent growth potential without undue risk. Safety in Numbers For individual investors it can be expensive and risky to invest directly in the stock market. Another option is to pool your savings with others in professionally managed funds. This helps spread risk by providing access to a wide range of investments At the same time, these funds realise cost savings by buying in bulk. Forester Life invests your savings in unit-linked investment funds. These funds are made up of a range of different investments which are divided into a large number of units of equal value. Each payment along with those of other contributors, buys a number of these units. The value of each unit depends on the value of the underlying investments that make up the fund, which is calculated each business day. This means that the value of your savings can be determined at any time by multiplying the number of units in your Plan by the unit price at that time. Spreading the Risk All payments to your child’s Plan will initially be invested in our Stakeholder Managed Fund 1, which aims to achieve medium to long-term growth. This fund is made up of a conservative
selection of investments, which consist of fixed interest and index linked securities (stocks) as well as shares. The stocks provide the fund with stability while the shares provide the opportunity for growth. To control the investment risk no more than 60% of the fund is invested in shares at any time. Information about asset breakdown and investment performance is contained in regular investment bulletins. Lifestyling To further reduce investment risk, your child’s Plan will be lifestyled in its later years. This means that we will progressively redirect subscriptions and switch units in the Plan from the Stakeholder Managed Fund 1 to a lower risk fund which is invested in gilts and other fixed interest securities. The aim is to gradually reduce exposure to shares and help to shelter your child’s Plan from stock market swings as it approaches maturity. Lifestyling will normally commence from your child’s 13th birthday. However you can, if you wish, opt out of lifestyling on this Plan. Stakeholder Standards Stakeholder schemes were introduced by the Government to offer consumers straightforward, low-cost and risk-controlled products with minimum standards. As a stakeholder account, the Forester Life Child Trust Fund meets the risk control standards for diversification and suitability of investments. However, this does not guarantee that there can never be a loss of value or that a stakeholder scheme is necessarily the right investment for you.
Forester Life Child Trust Fund (Stakeholder Account)
Its Aims • To invest Government Child Trust Fund contributions for your child (where applicable). • To invest subscriptions from yourself and other family members, friends and anyone else who wishes to supplement the Government contributions. • To provide your child with a lump sum benefit at age 18. • To achieve tax efficient long-term savings growth in a riskcontrolled stakeholder account. We will aim to reduce the investment risk of the Plan in its later years by following a ‘lifestyle’ investment strategy. Your Commitment • All subscriptions to the Plan are ‘locked in’ and, except in the event of your child’s earlier death or terminal illness, can only be accessed by the child at age 18. • To act on behalf of your child until your child takes over responsibility for the Plan at age 16. • To provide your child with the best start in adult life you should aim to supplement any Government contributions with monthly and/or single subscriptions. • Regular subscriptions will increase automatically each year to keep pace with inflation (within allowable limits). Risk Factors • The value of the Plan may fluctuate as the value of the investments in the Forester Life Stakeholder Managed Fund 1 can go down as well as up. Your child may get back less than has been invested. • The favourable tax treatment of Child Trust Fund Accounts may change in the future. • Whilst this Plan meets the standards for a stakeholder Child Trust Fund Account this does not necessarily mean that the investment is suitable for you or that there is any guarantee of performance.
Your questions answered Will my child be eligible? • Child Trust Fund packs, including the Government voucher, were automatically sent to all people claiming child benefit for children that qualify. How is the Plan opened? • The Plan has to be opened by someone, aged 16 years or over, with parental responsibility of the child. • The person will become the ‘Registered contact’ and will be responsible for managing the Plan until the child’s 16th birthday. How can subscriptions be paid? • Single subscriptions can be made by cheque or direct credit. • Regular subscriptions are collected monthly by direct debit or standing order from each subscriber. • Subscriptions will be accepted in date order up to the maximum subscription limit. Can monthly subscriptions be increased? • Each year we will automatically increase the amounts received from each monthly subscriber to help the Plan keep pace with inflation. • There is a minimum increase of 2.5% each year which will provide a boost to your Plan when inflation is low. • Additional monthly increases from £5 upwards can be made at any time subject to the subscription limit. Can monthly subscriptions be reduced or stopped? • Yes. Any monthly subscriber can stop paying or reduce their monthly subscriptions at any time. • Reductions are subject to a minimum of £5 and a minimum ongoing subscription of £10. • If any subscriber wishes to stop automatic increases to their subscriptions they should tell us at least 14 days before the increase is due.
How will I keep track of the value of the Plan? • Every year we will send you a statement showing the payments received, the number of units held and the value of your child’s Plan. • You can check unit prices at any time. Simply visit our website at foresters.com or phone the Unit Price Information line on 0800 990011. • You should monitor the value of the Plan and the level of subscriptions paid. Can money be withdrawn from the Plan? • No. All savings are locked in until your child’s 18th birthday. • At that age the accumulated fund will be payable as a cash lump sum to your child allowing them to spend or reinvest it as they wish. Is there a death benefit? • Yes. In the event that your child dies before age 18 we will pay out 101% of the value of units to the child’s legal personal representatives. • In exceptional circumstances payment may also be made in the event of your child suffering a terminal illness. What are the charges? • The Forester Life Child Trust Fund is a stakeholder account and as such meets the Government standard for ‘capped’ charges. • There is an annual charge of 1.5% of the value of the funds you accumulate. • If your fund is valued at £250 throughout the year, this means that we deduct £3.75 that year. If your fund is valued at £500 throughout the year, this means that we deduct £7.50 that year. • There are no initial or exit charges. How do stakeholder accounts differ? • Child Trust Funds can be stakeholder or non-stakeholder but only one type can be held at any time.
• Stakeholder accounts must satisfy Government standards for minimum subscriptions from £10, a range of payment methods and charges of no more than 1.5% of the fund. • Scheme investments must be suitable and take into account the need for diversification with lifestyling to progressively reduce the investment risk as the Plan approaches maturity. • Accounts that meet stakeholder conditions are not necessarily suitable investments for a customer, nor do they offer any guarantee of performance. For more information about stakeholder standards turn to page 3. What is the tax situation on the CTF account? • Growth within the account is completely free of income and capital gains tax, except for dividends from UK shares. • At age 18 the proceeds are payable to your child as a tax free lump sum. Does my child’s Plan have to be lifestyled? • No. We will write to tell you when lifestyling is due to commence which will normally be from your child’s 13th birthday. At that time you can choose whether you wish the Plan to be lifestyled or to continue to be fully invested in the Stakeholder Managed Fund 1. Can Child Trust Fund Accounts be transferred? • Yes, the Child Trust Fund rules allow you to switch between providers free of charge. • For more information about how to transfer please speak to your local adviser or contact our Customer Services Team.
Additional information What if I change my mind? • Once we have checked your application, we will issue you with your Plan Document and a notice of your right to cancel. • You then have 30 days from receipt of this notice in which you can change your mind about taking out this Plan. • Under HM Revenue and Customs rules we can only open a Plan once this cancellation period has expired. Any subscriptions received for your child will be held in a non-interest bearing account until the Plan is opened. What law is the Plan subject to? • All Forester Life Plans are subject to the law of England and Wales. • We will always communicate with you using the English Language. What if I am unhappy with the service I receive? • We take the concerns of our customers very seriously. If you are unhappy with any aspect of the service provided by us, please write to the Customer Relations Officer at Foresters, Foresters House, 2 Cromwell Avenue, Bromley BR2 9BF. • If we do not deal with your complaint to your satisfaction, you can write to the Financial Ombudsman Service (FOS), South Quay Plaza, 183 Marsh Wall, London, E14 9SR. Tel: 0845 080 1800. Making a complaint will not prejudice your right to take legal action. • You can view Foresters customer complaints procedure at foresters.com or phone 0333 600 0333 for a copy. Are we covered by the Financial Services Compensation Scheme (FSCS)? • Yes. This means that you may be entitled to compensation from the FSCS in the unlikely event that we cannot meet our obligations.
• Compensation depends on the type of business and the circumstances of the claim. • Further information about compensation scheme arrangements is available from the FSCS at fscs.org.uk or by phone on 0800 678 1100. Where can I find out more? • Full details are set out in the Terms and Conditions which are provided with your Plan Document. A specimen copy is available on request. • Alternatively, you can speak to your Forester Life adviser, or contact our Customer Services Team. • For information about the financial planning service offered by Forester Life, and about your data protection rights, please refer to our ‘Forester Life financial planning service’ brochure.
How to contact us
Customer Services Team Forester Life Foresters House 2 Cromwell Avenue Bromley BR2 9BF
T 0333 600 0333 8:30am to 5:00pm weekdays Calls are charged at local rates E email@example.com foresters.com
Important Information This brochure is issued by Forester Life Limited, Foresters House, 2 Cromwell Avenue, Bromley BR2 9BF and is a guide to our Child Trust Fund. It is based on our current understanding of current legislation and tax practice as at February 2012, which may change in the future.
Your views count. At Foresters we provide products, advice and service that embrace financial sense and simplicity. If there is anything in this brochure you don’t understand, or you have special needs, please do tell us. You can email your comments to firstname.lastname@example.org or phone us on 0333 600 0333.
Forester Life Ltd is authorised and regulated by the Financial Services Authority. Forester Life Ltd is registered in England number: 2997655. Registered Office: Forester Life Ltd, Foresters House, 2 Cromwell Avenue, Bromley BR2 9BF T 0333 600 0333 F 020 8628 3500 E email@example.com