Consumer-friendly principles and practices of financial management (CFPPFM) Your guide to how we manage our OneFamily (EM) With Profits Fund - Protected Investment Bond / Protected Loyalty Bond Contents What is our OneFamily (EM) With Profits Fund? 2 3 Summary 3 How the Fund invests 4 Sharing performance 4 Guarantees 4 Smoothed returns 4 What affects the overall performance of the Fund? 5 Investment returns 5 Asset mix 5 Expenses 6 Other factors 6 How is the Fund managed fairly and effectively? 7 Decision making 7 Investment strategy and additional assets 7 Closing the Fund to new business 7 The Protected Investment Bond and Protected Loyalty Bond 8 Summary 8 What are the guaranteed benefits? 8 What affects the amount I get back? 8 Smoothing returns 10 Further information 11 About this guide Here you’ll find the main points you need to know about investing in our OneFamily (EM) With Profits Fund, along with important information on how our Protected Investment Bond and Protected Loyalty Bond work. You’re likely to need this guide in the future, so please keep it safe with your other Bond documents. In this document we may refer to the Onefamily (EM) With Profits Fund as either the Fund or the With Profits Fund. Want to know more? If you need more information about your Protected Investment Bond or Protected Loyalty Bond, you’ll find it in your Key Features booklet or in the other literature you received when you took out your Bond. Please note – the way we manage our With Profits Fund may change in the future. We’ll let you know if we make any changes that might significantly affect your investment. What is our With Profits Fund? Summary Our With Profits Fund is an investment fund. We form the Fund by combining your money with other investors’ money, and we manage it for you. Policies investing in the Fund are medium to long-term investments. So you should ideally keep your investment for at least 10 years. The Fund provides some stability against the short-term ups and downs of the investment markets. It does this by ‘smoothing’ returns (see page 4) and pooling your money with other investors’ money. In this way, everyone shares in the profits or losses of the Fund. 3 How the Fund invests Sharing performance Our With Profits Fund can invest in a wide range of investments. These include: The Fund’s performance is shared between you and other policyholders in different ways, depending on the type of policy you hold. For single-premium With Profits policies that started after 31 October 2006, the performance is shared out through changes in the price of units allocated to each policy. This applies to the Protected Investment Bond and the Protected Loyalty Bond. • fixed interest securities and government bonds • the shares of UK and overseas companies • property For all other With Profits policies, the performance of the Fund is shared out to policyholders through bonuses. • cash • other investments such as currency, commodities or structured investments Guarantees Unlike many stock market based investments, policies investing in our With Profits Fund guarantee you’ll get back at least a certain amount of money. You can find out more in page 8 of this guide. • our own business activities involving the additional assets of the Fund (see How is the Fund managed fairly and effectively? page 7). Smoothed returns Help ation Plus The investment returns the Fund Different policies in the Fund invest achieves will vary over time. There Phone in different Login/Logout in these investments Inbox might be periods when investments do proportions. very well, but others when they may You canEmail find out more Print perform badly. Our With Profits Archive Fund information on how the uses a process known as smoothing to Fund invests at Phone of these short-term Login/Logout Help help even out some Mail Account details onefamily.com/withprofits Create message variations in performance. Minus Document Information Debit/Credit Card Cross Download Plus Photo/Camera Tick Statement Right Calculator Left Guide Minus Cross Tick Right 4 Search Video Tools You canEmail find out more about Print Fur smoothed returns Family in the Principles and Practices of Account details FinancialMail Management (PPFM) Finance at onefamily.com/withprofits Document Debit/Credit Card Health Download Photo/Camera Visit Website Statement Search Calculator Video What affects the overall performance of the Fund? Investment returns Asset mix The investment returns the Fund’s assets earn, after any tax has been paid, will have the biggest impact on the Fund’s performance. Returns on company shares are more variable than those on other assets, because they are higher risk investments. Their values tend to go up and down more than other assets, such as government bonds, or cash, which can be less volatile. However, looking back, company shares have tended to provide better returns than cash over the long term. Because the investment performance of different types of assets may vary considerably over time, the overall performance of the Fund will depend on the mix of assets it holds. However, we manage the Fund by notionally allocating different proportions of each asset class to each group of policies, depending on the type of policy. We then attribute to each policy the investment return earned by these assets. Please remember, past performance isn’t a reliable guide to future results. The value of your investment may fall as well as rise, and you could get back less than you’ve paid in. Help Information Plus We regularly monitor the asset mix for the Fund, and for different groups. We’ll change the asset mix, depending on: • the total amount of policy guarantees, and when these guarantees are likely to arise • our view of investment market conditions • the overall financial strength of the Fund (in other words, the size of theassets over and above what’s Phone Login/Logout needed to meet policyholder benefits and cover other business risks). You canEmail find out more Print information on how the Fund invests at Mail Account details onefamily.com/withprofits Minus Document Debit/Credit Card Cross Download Photo/Camera Tick Statement Search 5 Expenses The expenses of managing the Fund are paid for out of the Fund’s assets. These expenses will typically cover: • the costs of managing the Fund • the ongoing costs of administering existing policies invested in the Fund • the costs of setting up new policies invested in the Fund • the costs of investing the Fund’s assets. 6 For some policies, we cover these expenses by making specific charges against each policy. For others, we allow for the expenses in the returns allocated to each policy. Other factors The Fund’s performance can also be affected by other business risks the Fund supports – for example, the costs of meeting any investment guarantees or providing life assurance. Profits or losses arising on policies within the Fund that are not ‘with profits’ can also affect the Fund’s performance. How is the Fund managed fairly and effectively? Decision making We have a framework to ensure we manage the Fund fairly and effectively, and in keeping with the regulations of the Financial Conduct Authority (FCA). We produce a document called the Principles and Practices of Financial Management (PPFM), which gives detailed and technical information about how we manage our With Profits Fund. A sub-committee of the Board of Directors meets regularly to review the Fund’s progress, and to make sure it’s managed in keeping with the PPFM. This sub-committee includes nonexecutive members and the With Profits Actuary, who is specifically appointed under FCA Regulations, to give advice to the Board of Directors and ensure that bondholders are treated fairly. Every year, the Board of Directors and the With Profits Actuary produce a report for bondholders, confirming that the With Profits Fund has been managed in keeping with the PPFM. Help ation Plus Minus Investment strategy and additional assets The investment strategy for the Fund is the responsibility of the Board, but is managed by the Board sub-committee, who recommend how much of the Fund to invest in each type of asset. The investment strategy also takes account of the ‘additional assets’ in the Fund. These are the assets over and above those needed to meet policyholder benefits. We use them to cover business risks, the cost of providing guaranteed benefits, and the costs of any smoothing – also to finance setting up new policies. The additional assets are not owned by any particular type of policyholder, and we don’t aim for them to be a particular size. However, the Board of Directors will review the Fund’s progress every year, and confirm there aren’t excess additional assets. If we find that the Fund does have excess additional assets, the Board may consider how we could use some of them to improve payouts to existing policyholders. Closing the Fund to new policies If the way we manage our With Profits Fund changes in the future, we’ll update We will keep the Fund open to new the PPFM, and let you know about any policies, as long as we expect them to be Phone significantly affect Login/Logout changes that might profitable and they’re withinInbox the Fund’s your investment. solvency tolerance. If we were to close the Fund to new policies, we would inform all You canEmail find the PPFM at Print Archive policyholders, explaining the likely impact onefamily.com/withprofits on the Fund, and any changes needed to the PPFM. We would also submit a Mail Account details Create detailed financial plan formessage approval by the Financial Conduct Authority. Document Debit/Credit Card Family 7 Fur The Protected Investment Bond and Protected Loyalty Bond Summary The Protected Investment Bond and the Protected Loyalty Bond are types of policies known as Single Premium Unitised With Profits Policies. When you invest in either the Protected Investment Bond or the Protected Loyalty Bond, we allocate a certain number of units to your Bond. We use these to calculate what you’ve invested in your Bond, and its value. We aim to increase the value of your Bond over time by increasing the price of the units. Your return on your investment will depend on the value of the units when you cash in your Bond, after allowing for any investment guarantees or smoothing. What are the guaranteed benefits? On the 5th, 10th or any subsequent 10th anniversary, you can cash in your Protected Investment Bond or Protected Loyalty Bond and receive at least your original investment, less any withdrawals you’ve made – even if the Fund has fallen in value. A guarantee also applies if you die at any time while your Bond is in force. If you’re the sole bondholder, your estate will receive the greater of: 8 • 101% of the units notionally allocated to your Bond on the day before your death, calculated at the unit price on the day we’re told about your death, or • 101% of your original investment, less any withdrawals you’ve made. What affects the amount I will get back? This section describes the amount you get back, before allowing for any additional assets we may use to improve payouts to existing policyholders. (You’ll find more information on additional assets in the previous section.) The amount you get back will depend on the value of the units when you cash in your Bond. Each week, we calculate the price of the units, which reflects: • the investment performance of the underlying assets • the annual management charge and charges for guarantees • any miscellaneous profits or losses generated by the overall With Profits Fund • taxation. Here’s a little more information about the factors affecting the price of the units. Investment performance Your Bond currently invests in the Insight Investment Global Absolute Return (GAR) fund. If we need to change this in the future, we’ll let you know, and tell you why. The Insight Investment GAR fund is a UCITS III structure, and derivatives may be used to meet its objectives. The composition of our With Profits Fund and the proportion of each type of investment within it will vary, reflecting changing market conditions. The Fund will invest in one or more of the following asset classes: bonds, cash, near cash and deposits, equities, property, commodities and derivatives. The underlying investments could perform below their target levels, or changing investment conditions could mean the cost of providing the guarantees exceeds the guarantee charge we take from your Bond (see below). If either of these happens, to protect all members in the With Profits Fund, we might: Expenses and charges As with any investment, there are expenses involved in setting up and administering your Bond, and managing the investments. There are also costs in providing the guaranteed benefits. We cover these costs by applying charges to your Bond. You’ll find details of these in your Key Features booklet and Policy Conditions. As described in the section above, there are circumstances where we might have to increase the charge for providing the guarantees. Miscellaneous profits/losses Miscellaneous profits or losses may arise from the activities of the overall With Profits Fund – for example, profits from non-profit business. These profits or losses are usually shared across the whole Fund, rather than going to any particular group of policyholders. We regularly check for miscellaneous profits or losses, and consider carefully how to allocate them to bondholders and policyholders. • increase the charge we make for providing the guarantees, or • change the investment mix of your Bond, so that a larger proportion is held in more secure assets, such as government bonds or cash. We would do these only with the approval of the With Profits Actuary and the Board. 9 Any allocation of miscellaneous profits or losses is approved by the With Profits Actuary and the Board. If any miscellaneous profits or losses affect either the Protected Investment Bond or the Protected Loyalty Bond, we reflect this in the unit price, or in the number of units allocated. Smoothing returns Investments such as stocks and shares can rise and fall sharply in value. Large movements over short periods of time could potentially mean a significant change in the value of your Bond, in just a few days or weeks. To protect you from some of this shortterm volatility, we average the price changes during the previous 26 weeks. This would give you some protection if you cashed in some, or all, of your Bond at a time when, for example, stock market performance has been weak. Conversely, if stock market performance has been strong, you won’t receive the full benefit of this, because of the averaging. We do the averaging by giving your Bond two unit prices. One is the Pure Price, which reflects the actual value of the investments underlying your Bond. When you first make your investment, we allocate units to your Bond at the Pure Price. 10 The other unit price is the Average Price, which is the average of the Pure Price over the previous 26 weeks. We will use the Average Price to calculate the value of your Bond when you cash it in after its first 26 weeks. If you make partial or regular withdrawals, the number of units we cancel is based on the Average Price. The only exception to the above is when the Pure Price is less than 90% of the Average Price. In this situation, to protect the remaining members of the With Profits Fund, we base any surrenders or partial withdrawals on the Pure Price. If you were to die, and we were notified of your death within the first 26 weeks of your Bond being in force, we would use the Pure Price to value the units. After 26 weeks, we would use the Average Price. It’s possible for the Average Price to be lower than the Pure Price – for example, if the market has risen rapidly over a short period of time. Over the long run, the financial impact of smoothing returns on the overall With Profits Fund is expected to be neutral. If any long-term profits arise as a result of smoothing returns, we give them back to bondholders as miscellaneous profits. hone mail Mail ment load ment ator uide On our website Login/Logout Inbox Print Archive If you’d like to know more, our Principles and Practices of Financial Management Accountmore details detailed and Create message (PPFM) gives technical information about how we manage the With Profits Fund. You Family Debit/Credit Card can find the PPFM at onefamily.com/ withprofits or you can ask us to send you Photo/Camera Phone Help Phone a copy (please see contact details). Finance Help If you need more information about Search Email Information your Bond, you’ll find it in your Key Health Email Information Features booklet or in the other Video Pluswhen you took literature you received Visit Website Mail Mail Plus out your Bond. The way we manage our With Profits Fund may change in the Tools Document Document Minus future. We’ll let youMinus know if we make any changes that might significantly affect Download your investment. Cross Download Cross If you have any other questions, please contact us at: OneFamily Form to fill Hornbeam Park Avenue HarrogateFurther reading HG2 8XE Satisfaction Login/Logout Login/Logout 0500 848 262 Print Print [email protected] Account onefamily.com/withprofits Account details details Inbox Inbox Archive Archive Create Create message message Debit/Credit Debit/Credit Card Card Family Family Photo/Camera Photo/Camera Finance Finance Tick Tick Statement Statement Search Search Health Health Right Right Calculator Calculator Video Video Visit Visit Website Website Left Left Guide Guide Tools Tools 11 Inbox Archive message Form to fill Family Further reading Finance Satisfaction Health Website Phone Email Mail ocument ownload Visit us at onefamily.com/withprofits Call us Login/Logout on 0500 848 262* Print Email us at [email protected] *Lines open: Monday-Friday 9am-7pm, Saturday Account details 9am-1pm. We might record your call to help improve our training and for security purposes. We hope you don’t mind. Calls are only free from UK landlines. Debit/Credit Card Inbox Archive Create message Form to fill Family Further reading Photo/Camera OneFamily, Hornbeam Park Avenue, Harrogate, HG2 8XE tel: 01423 855000Finance fax: 01423 855181. Satisfaction OneFamily is a trading name of Family Assurance Friendly Society Limited, (incorporated under the Friendly Societies Act 1992, Reg. No. 939F). Registered in England & Wales at 16-17 West Street, Brighton, BN1 2RL, United Kingdom. atementFamily Assurance Friendly Society Limited Searchis authorised by the Prudential Regulation HealthAuthority and regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority. Family Assurance Friendly Society Limited’s Financial Services Register number is 110067. You can check this on the Financial Services Register at www.fca.org.uk/firms/systems-reporting/register or by contacting the FCA on 0800 111 6768. alculator Video Visit Website 150507/002
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