Video looks at the often missed tax free opportunity for savings for adults and children using friendly society policies.
“Hello again, continuing my series for savings for children, another type of savings vehicle for children that's that not commonly known about and not commonly used is the friendly society plan. Friendly Societies, The Friendly Societies Act of 1875.
Now, there aren't many left now, there are’nt many friendly societies around now, they’ve tended to merge or change or become full-blown insurance companies or taken over by other companies and things like that. But friendly societies started, like I say the legislation was back in 1875 because fundamentally, at the time, there was no benefit system, so what people did was they saved and they saved in friendly societies.
Usually these would be local, the local village friendly society or the local town or it may be a friendly society from an occupation and, you know, to name but a few: Liverpool Friendly Society, Nottingham Friendly Society, some that are still in existence today are the Foresters Friendly Society if you are a forester or the Shepherds Friendly Society, they're still out there as well, and that’s not a recommendation by the way for any of those companies, any of those friendly societies I should say.
But Friendly Societies fundamentally: the rules are either:
You or your child so not [just] an adult, each of you can have a friendly society savings plan
Now, a Friendly Society savings plan, the maximum you can save in a friendly society plan is either £270 per annum, so one-off lump sum contributions, or alternatively up to £300 per annum, if it's regular savings and what that equates to is £25 per month. So to keep it simple for today, friendly society savings plans for adults or children £25 per month is the maximum that you can save in a friendly society plan.
They are tax privileged so we’re looking at tax efficient savings again just like an ISA just like a junior ISA, so you can save in a friendly society plan. They tend to be more, sort of endowment type savings vehicles where there's an element, a small element of life insurance cover etc. But again you have the same sort of choices where it can either be a fairly cautious with profits type fund friendly society savings plan or indeed a number of them do offer market linked, stock market linked friendly society savings plans, index tracker funds, stock market tracker funds and things like that.
So going back to all of this series of savings for children if you've used your child trust fund allowance, used the junior ISA allowance, you've looked at investment trusts and thought about assignment or bare trusts and all those and pensions and pension millionaire and things like that, also don't forget the friendly society plan.
£25 per month per individual and like I’ve said: your child can also have a friendly society savings plan. Watch the charges, some of them, you know? You’ve got to analyse charges again as ever the same with the junior ISA or a pension scheme or a unit trust and you do need to analyse charges but friendly society savings plans they are another option for you, an addition to saving for your child or children.
Thanks very much for watching.”