Investment Bond

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 such time as you need it. Should you need to withdraw some of your investment at a future date we can invest your lump sum in up to three separate 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 your 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.

The bond is available to all ages, though for children under the age of 13 a parent or guardian will be required to complete the proposal form. In addition, a parent or guardian's signature will be required to surrender a bond where a child is under the age of 16 at the time of the request. 

If saving for a child, on maturity or surrender the payment is made to the child as the beneficiary of the policy.

The Society invests in a range of different assets with the aim of providing a higher return in the medium to longer term (five to ten years+) than may be achievable with a bank or building society account. We will look to achieve this by maintaining a spread of investment assets that will provide a medium to low risk making it an option for individuals with a more cautious approach to investing their money.

Types of assets we invest in are:

• Shares of companies - we have exposure to UK based and overseas companies to provide diversification.
• Fixed interest investments such as government gilts and corporate bonds.
• Property - the Society owns a property portfolio which provides rental income and offers capital growth.
• Commercial mortgages from a small portfolio providing a fixed rate return.
• Cash

The proportion held in each of these will vary depending on market conditions. We can provide you with a guide to the spread of investments. 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 we review the returns achieved during the previous calendar year and declare a bonus rate for each policy type for that period. 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 sum assured not the amount of premium paid and on encashment after five years subject to the conditions outlined below, you will receive the initial sum assured plus bonuses added during the life of the policy.

We also try to ‘smooth’ returns over the life of the policy by retaining some of the investment return in good years to maintain bonus rates in less positive years. However, to ensure members receive their fair share of returns on their policy 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 your 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. Please note, 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.

Providing the plan runs for at least five years, we will guarantee a minimum final return of your original investment plus 5%. The final value of your plan will depend upon investment performance, but bonuses are declared each year, and these are added to your 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 105% 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 the initial investment plus 5%. In the event of death, 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.

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 you die the people who inherit your bond may have to pay inheritance tax and some income tax.

When you open a policy with us, you 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, you 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. Please contact the office on 01226 741 000 or fill in out contact form and one of the team will be in touch.

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.