Our products and services have been developed to include a simple range of trusted savings, investment and protection plans - with a particular emphasis on tax-efficient savings and investment plans for the whole family.
Children's Investment Bond
Invest in their future with this medium to long-term plan
- Invest a lump sum between £1,000 - £150,000
- Guaranteed minimum return of your original investment plus 3% after five years
- Higher potential returns than a bank or building society
- Possible annual and final bonuses
If you surrender in the first five years a surrender penalty will apply, meaning you might get back less than you invested. Tax treatment depends on individual circumstances and may be subject to change in the future. Bonuses are not guaranteed.
About this policy
Have a lump sum you're thinking of investing on behalf of a little one? Our Children's Investment Bond could be the perfect option to watch their savings grow. Our Investment Bond is a single premium investment that has no fixed term, but is designed to be held for a minimum of five years.
Please be aware that a surrender penalty will apply if cashed in within the first five years and the child could get back less than you invested.
What are they?
These plans are designed for anyone that has a single lump sum they want to invest over the medium to long-term.
There is also the added bonus of knowing that if you invest for five years or longer, the child will be guaranteed a minimum return of at least 103% after five years of the initial investment.
Who are they for?
Anyone can have a plan, although an adult (the proposer) will need to complete the proposal form for any child under the age of 11 and their signature required for a withdrawal or surrender for any child under the age of 16.
You can also open this bond in joint names.
Why open one?
Our Children's Investment Bond is a great way to invest a lump sum for a child you care about, with the added peace of mind of a minimum guaranteed amount of 103% (after five years) plus potential annual and final bonuses.
Frequently asked questions
Our most commonly asked questions surrounding the Children's Investment Bond can be found below.
We recommend a minimum investment period of five years, after which you can either withdraw your investment or leave it to earn future bonuses until you need it. Should you need to withdraw some of your investment at a future date you can invest the lump sum in multiple policies, with a minimum of £1,000 per policy, which will enable you to withdraw part of your investment without having to surrender (cash in) the entire investment. If you surrender the bond within five years of commencement then a surrender penalty will apply and you may get back less than you invested.
No, this bond does not provide any income, but if you require income you might want to consider our Income Bond.
Please note, the Income Bond can only available to those 18+.
We invest in a range of different assets with the aim of providing a higher return in the medium to long-term than is achievable with a bank or building society account. Sheffield Mutual's with-profits fund is managed to provide a low to medium risk investment, appealing to anyone with a more cautious approach to investment. Our investments include property, shares of UK companies, government gilts, corporate bonds, commercial mortgages and cash.
The proportion held in each of these will vary depending on market conditions. You'll be pleased to know that we seek to adopt an ethical approach to investing and it is our policy not to invest knowingly or directly in industries relating to armaments, tobacco, gambling or pornography.
We invest our funds as described in the previous section and receive a return on those investments which can vary from year to year. At the end of March or early April we review the returns achieved during the previous calendar year and then declare a bonus rate for each product type. The rate varies depending upon overall investment returns and is not therefore guaranteed to be paid at the same rate or at all, in future years.
Bonuses are calculated at the appropriate rate based on the final amount (sum assured) not the amount of premium paid and on encashment after five years subject to the conditions outlined below. The policyholder will receive the initial final amount plus bonuses added during the life of the policy.
The Society also tries to ‘smooth’ returns over the life of the bond by retaining some of the investment return in good years to maintain bonus rates in less positive years. However, to ensure the child receives their fair share of returns on their bond over its lifetime, there may be an additional terminal bonus paid on maturity. Payment of this type of bonus depends entirely on investment performance and the rate at which annual bonuses have been added and is not guaranteed.
You cannot make any withdrawals, but if your circumstances change, you can surrender the policy. However, the plan is designed for medium to long-term investment and the surrender value may be less than the amount you have paid in. It is not advisable to invest in this bond if you know at the outset that you will require the money within five years. There is the option to split your investment into up to three separate policies, which means you would not need to surrender the whole amount if you need to withdraw funds in the future. Please be aware, a parent or guardian’s signature will be required to withdraw or surrender a bond where a child is under the age of 16 at the time of the request.
Providing the bond runs for at least five years, we will guarantee a minimum final amount of 103% of the initial investment. The final value of the child's plan will depend upon investment performance, but bonuses are declared each year, and these are added to the guaranteed final amount.
In the event of adverse investment conditions the Society reserves the right to apply a Market Value Reduction (MVR) to the final amount (sum assured) and any bonus already added. However the Society guarantees that the application of the MVR after five years will not reduce the proceeds below 103% of the initial investment. An MVR will not be applied in the event of the policy becoming a claim as a result of the death of the single policy holder or the death of the second policy holder for joint policies.
The Bond provides a guaranteed final amount of 103% of the initial investment. In the event of death of the policyholder, we will pay out the final amount plus any bonuses that have been added to your policy. In the case of a joint life application on the first death, the bond will continue in the name of the survivor. In the case of death of the proposer of the plan, the policy would continue in the policyholder(s) name(s).
If saving for a child, on maturity or surrender the payment is made to the child as the beneficiary of the policy.
The money you save is invested in a fund on which the Society pays tax and tax at the basic rate may be treated as paid on any taxable gain, which means there is likely to be no further tax to pay unless you are taxable at the higher rate. However, a gain on which tax is treated as paid may have an effect on your tax liability if you qualify for age-related allowances or reliefs, or you are receiving tax credits. All references to taxation are based on the Society’s understanding of current tax legislation and practice, which may change in the future.
If the policyholder dies, the people who inherit the bond may have to pay inheritance and income tax.
When you open a policy with us, the policyholder will automatically become a member of the Society (adult policyholders only). As well as being able to have your say on how the Society is run each year, the policyholder will also have access to various discretionary benefits when available, such as optical and dental grants, as well as exclusive access to a range of discounts and offers.
Our team would be more than happy to provide you with factual information about our products and services, so you can make your own decision about how to proceed. However, we are unable to give any advice or recommendations on the suitability of our products. If you are unsure, you should seek advice from a qualified financial adviser, which may incur a fee.
To comply with regulations, we will require confirmation of your identification and address. We’ll aim to do this using an electronic verification system, but reserve the right to ask for appropriate documentation from you, if this is not possible. If the policy is for a child we'll need a copy of their birth certificate which must be independently certified if saving more than £2,000.
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