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Engage offers new opportunity to save for kids, tax exempt

Posted in: Products Last updated: 02 Oct 2007

Engage Mutual Assurance, a leading provider of Child Trust Funds (CTF), today launches a new product to encourage parents to save for older children who missed the CTF deadline…

From early October, engage will be making its Easy Save product available to children under 16. Junior Easy Save offers the opportunity for parents to invest up to £25 a month tax exempt into engage Mutual’s successful With Profit fund, which has a history of stability and good performance*. With the added benefit of a guaranteed minimum payout (provided all premiums are paid up and the plan has reached the end of the premium payment term) at the end of the savings term, this offers additional peace of mind against market volatility.

The Government’s Child Trust Fund scheme has been attributed with increasing childhood savings and engage Mutual is also keen to encourage parents to save for those older children who don’t qualify for CTF.

Tax exempt savings of up to £25 a month are available exclusively from Friendly Societies and engage Mutual sees this as a great opportunity to encourage parents to save more for their children’s future.

Karl Elliott, Marketing Director at engage Mutual Assurance said:

“engage Mutual is committed to helping families to save little and often for their future. Childhood savings are particularly important given rising costs of university education and living independently in adulthood.Parents who set up savings schemes for their children are not only investing in their future financially, but also helping to educate them in the importance of saving.”

“Having listened to our customers’ concerns for children missing the CTF deadline, engage Mutual is launching our Easy Save product to the whole family. Junior Easy Save is a simple investment which guarantees a minimum payout equivalent to the premium paid out at the end of the savings term. As a Friendly Society, engage Mutual is in a unique position to be able to offer children’s tax-exempt savings, something we believe is extremely important for future generations. We hope that parents will use Junior Easy Save as a simple trustworthy vehicle to save regularly for their children’s future.”

Junior easy save product features:

  • a tax free payout at the end of the premium payment term
  • available to all UK residents under 16 years old
  • tax Exempt Savings allowance of up to £25 per month or up to £270 a year
  • a regular savings vehicle
  • invests in engage Mutual’s successful With Profit fund
  • the minimum savings term of 10 years
  • guaranteed minimum payout (Provided all premiums have been paid and the plan has reached the end of the premium payment term the tax-free payout will be at least equal to the total premiums paid provided the policy is cashed in within 28 days after the end of the premium payment term. The guarantee does not apply if the policy is cashed in outside of the 28 day period)

What the child might get back

child aged 6 next birthday:
savings term: 10 years
monthly premium: £25
life cover: £2,250
if investments grew at 5% per year the child would get back £3,260
if investments grew at 7% per year the child would get back £3,590
if investments grew at 9% per year your child would get back £3,96

  • these figures are only examples and are not guaranteed – they are not minimum or maxium amounts. What the child gets back depends on how the investment grows and on the tax treatment of the investment
  • the child could get back more or less than this
  • all firms use the same rates of growth for illustrations but their charges vary
  • inflation would reduce what the child could buy in the future with the amounts shown.

Statistics on Child Savings from engage Mutual’s 3GB Research**:

  • 46% of parents with children over the age of 25 still supporting them financially;
  • just one in six (17%) single Mums and Dads with children under 16 made regular payments into a child’s savings account in the last ten months, compared to 42 per cent of couples;
  • the proportion of young parents relying on grandparents to help pay for childcare costs has doubled in the last 9 months from 11% to 21% in the last year;
  • single parents are putting aside significantly less than their married counterparts, saving an average of £122 per child under 16 in the last ten months, compared to those married (or living as married) who saved £189 for each of their children.

About the product:

  • the child’s lump sum depends mainly on investment performance, and is not guaranteed
  • if the policy is cashed in early, the child is unlikely to get back as much as has been paid in
  • if the policy is cashed in before one year’s premiums have been paid, the child will not get anything back
  • our deductions may turn out to be higher than expected
  • a Market Value Adjust (MVA) may be applied when the policy is cashed in. This would effectively reduce the surrender value
  • the tax treatment of the fund may change
  • past performance is not an indication of future performance

engage Mutual Assurance can be contacted on 0800 169 4321 or by visiting www.engagemutual.com

The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.

Footnotes:

*Latest Moneyfacts magazine (September 2007) show above average returns over ten years on low cost with profit endowments. The table below shows the fund maturity value of a low cost with profits endowment after own charges have been deducted on 1st June 2007 for a non-smoker aged 29 years 11 months at outset, having contributed a gross annual premium of £500. Actual returns will depend on Junior Easy Save product charges. Past performance is not a guide to future performance.

   Male  Female
 Average (10 year term)  £5,803.54  £5,808.11
 engage Mutual (10 year term)   £6,103.00   £6,103.00

 

Source: Investment Life & Pensions Moneyfacts, September 2007

** ‘3GB’ is engage’s Three Generation Britain research index. Research was conducted by YouGov across a GB representative of over 2,000 adults every three months over the last 18months. The research explores the financial relationships of care between the generations and investigates shifts in traditional financial provision. Press releases available on request.

Notes to Editors:

  1. if using this article on a website, please link to www.engagemutual.com using the following hyperlink text :engage Mutual Assurance – meeting the changing needs of today’s modern families
  2. engage Mutual Assurance is a trading style of Homeowners Friendly Society (HFSL) and it’s wholly-owned subsidiary engageMutual Funds Limited (EMFL).
  3. engage Mutual Funds Limited (EMFL) is a provider of the Child Trust Fund direct and in partnership with partners including Legal and General, ASDA and Debenhams stores.
  4. engage supports mutuality, friendly societies and the regional financial services industry through links with the Association of Mutual Insurers, the Association of Friendly Societies, Mutuo and Leeds Financial Services Initiative.
  5. established in 1980, Homeowners Friendly Society Limited (HFSL) is Registered and Incorporated under the Friendly Societies Act 1992, Reg.No.964F, it’s wholly owned subsidiary engage Mutual Funds Limited (eMFL) is Registered in England No 3224780. Both are authorised and regulated by the Financial Services Authority (FSA).
  6. Homeowners Friendly Society Limited’s FSA Register number is 110072 and engage Mutual Funds Limited’s FSA Register number is 181487. You can check this on the FSA’s Register by visiting the FSA’s website www.fsa.gov.uk/register or by contacting the FSA on 0845 606 1234.