Who is eligible for a Junior Bond?
If you’re 18 or over you can open a Junior Bond for any child aged 15 and under.
How much can I invest?
Because of the favourable tax treatment, the Government has set maximum limits of £25 a month or £270 per year. But you can however choose to invest between £15 and £25 a month or between £165 and £270 a year by regular Direct Debit. Please note any gift options apply to monthly payment options only. Please call us for more details.
There is also an overall limit of £3600 a year that can be paid into qualifying policies (the Junior Bond is a qualifying policy). If you have one of these policies, regular yearly or monthly payments will be made and the policy will have an initial payment term of at least 10 years. The policy will also include some life cover.
What are Tax Exempt Savings Plans (TESPs)?
Tax Exempt Savings Plans (TESPs) are a way you can save tax-efficiently over the long term. They provide a tax-free lump sum at the end of the payment term you choose; payments must be paid for at least 10 years. TESPs are exclusively available from friendly societies, like OneFamily.
How long can I invest for?
The payment term you choose can be between 10 and 25 years, but it must be in full years. You can decide the payment term when you apply.
What if I change my mind?
You have 30 days to cancel the Junior Bond. If you wish to cancel, please complete the cancellation notice included in your Welcome Pack. Any money you have paid in will be returned to you in full.
What happens if I want to cash it in early?
A Junior Bond has no cash in value in its first year. If the Bond is cashed in between years 2 and 10, the policy value less a £50 charge will be paid.
Please remember if the Junior Bond is cashed in before its 10th anniversary, you may have to pay tax on any growth. This type of investment has to be invested for at least 10 years to be tax-efficient. See the “Withdrawals and closing the Junior Bond" section in the Important Information Booklet.
Where will the money be invested?
What are the charges?
- An initial set up charge of £60 will be taken from the first year's payments. We also apply an annual management charge of 1.5% of the fund value.
- A charge will also be taken for the child's life cover whenever the current value of the Junior Bond is lower than the sum assured. This charge is taken yearly, on the anniversary of the Bond. The charge we make for life cover depends on the child's age and the current value of the Bond when we take the charge.
- Expenses are also deducted from the Family Sovereign Fund. These can change but they are currently estimated to be no greater than 0.6% each year (correct as at 30th November 2016).
- If the policy is cashed-in between years 2 and 10, the child will receive the policy value less a £50 charge. Tax may also be payable. See "What happens at the end of the payment term?" for details about who can cash-in a Junior Bond.
What happens at the end of the payment term?
At the end of the payment term there are three choices, which we will remind you of nearer the time. These are:
- Continue to invest tax-efficiently by extending the Junior Bond. You can continue to make regular payments, but if the money is needed at any point, it can be accessed without penalty. And importantly, the tax-exempt status of the investment will remain.
- Leave the money invested in a tax-exempt fund even if you don’t carry on making regular payments. The investment can simply be left where it is, without affecting its tax-exempt status. The money can be accessed at any point in the future without penalty.
- Withdraw some or all of the money and continue to invest.
See the “Withdrawals and closing the Junior Bond" section in the Important Information Booklet for more details on who can cash-in a Junior Bond.
What about tax?
The Junior Bond is invested in a tax-exempt fund, although income received by the fund may be taxed before we receive it.
The final sum you receive will be free from Income Tax and Capital Gains Tax, as long as you make payments for at least 10 years. The tax advantages of the Junior Bond depend on your individual circumstances and the child's and could change in the future.
Are TESPS covered by the Financial Services Compensation Scheme (FSCS)?
Yes TESPs are covered by the Financial Services Compensation Scheme (FSCS). You may qualify for compensation from the FSCS if we fail or go bankrupt. Circumstances vary, but most types of long term investments like the Junior Bond are covered for 100% of the claim with no upper limit. If you’d like more information about the FSCS, please visit www.fscs.org.uk
What happens when the child turns 18 years old?
Until the child is 18, the Bond is looked after by the child's parent or legal guardian. You must nominate a parent or legal guardian when you apply.
Until the child is 18, we will only be able to accept instructions from the nominated parents or legal guardian. This includes withdrawal instructions, instructions to extend the payment term of the Bond and instructions to switch funds. Once the child is 18, we will only be able to accept instructions from the child.