Child Bond
Invest tax-free for your child
The Scottish Friendly Child Bond is a tax-free with-profits plan, which runs for a minimum of 10 years, which you can take out for any child under 16 that you care about. The table below provides the plan detail and things you should consider. For more information on Child Bond please visit the in detail tab.
| i Your Child Bond | i Things you should consider |
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No advice has been provided by Scottish Friendly in relation to this plan. If you are in any doubt as to whether this plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.
Invest tax-free for your child
Child Bond is a tax-free with-profits plan, which runs for a minimum of 10 years. You can take out a Child Bond for a child under 16. Under current law, you’re allowed to invest up to £25 per month tax-free for any child with a friendly society such as Scottish Friendly.
You don’t pay tax on the growth of the investment (other than tax on dividends from UK shares). And there’s no tax to pay when Child Bond pays out after your chosen term. Please note, that tax treatment depends on your individual circumstances and tax regulation is subject to future change.
Child Bond is the property of the child and you can be sure they’ll appreciate the extra money when they’re older.
Regular payments or lump sum
You can put away £10 to £25 per month or £120 to £270 per year in the Child Bond.
Please remember, if you stop the Child Bond within the first 2 years, the child will get nothing back. After the first 2 years, the payout may be lower than what you’ve paid in.
You can also invest a lump sum - a popular choice for Grandparents. It provides the reassurance that all premiums have been taken care of for the bond term.
Your lump sum is used to set up a separate funding plan. It goes into Scottish Friendly's Taxable Fund. The fund guarantees to make annual payments into your tax-exempt Child Bond.
The maximum lump sum you can invest is £2,340 for a 10 year period. It actually pays £270 per year into the Child Bond – a total of £2,700. The minimum lump sum is £1,040. It provides £120 per year – a total of £1,200.
The standard investment term is 10 years. You can set up a Child Bond for longer, until the child’s 18th or 21st birthday. For example, if your child is 3 on their next birthday for the bond to mature when they turn 18 you would need a 15 year term. The maximum sum you could invest would be £3,190. See the table below for amounts you can invest for periods over 10 years:
| Savings term | To save £120 a year | To save £195 a year | To save £270 a year |
|---|---|---|---|
| 10 years | £1,040.00 | £1,690.00 | £2,340.00 |
| 11 years | £1,121.78 | £1,822.89 | £2,524.00 |
| 12 years | £1,200.44 | £1,950.72 | £2,701.00 |
| 13 years | £1,275.56 | £2,072.78 | £2,870.00 |
| 14 years | £1,348.00 | £2,190.50 | £3033.00 |
| 15 years | £1,417.78 | £2,303.89 | £3,190.00 |
| 16 years | £1,484.44 | £2,412.22 | £3,340.00 |
| 17 years | £1,578.44 | £2,516.22 | £3,484.00 |
| 18 years | £1,609.78 | £2,615.89 | £3,622.00 |
| 19 years | £1,668.89 | £2,711.94 | £3,755.00 |
| 20 years | £1,725.33 | £2,803.67 | £3,882.00 |
Growth potential of the Child Bond
Your Child Bond money is invested in the Scottish Friendly With-Profits Fund. It is carefully managed across a range of assets, aiming for long-term growth and a degree of security in the form of a guaranteed minimum cash sum after 10 years. Please go to 'How we invest your money' to see how we look after your investment.
The child’s guaranteed minimum cash sum will depend on their age and how much you pay each month. At first, the guaranteed minimum cash sum will be less than the money you’ve paid in. But it’s designed to increase through the addition of bonuses.
The main long-term growth potential comes from the addition of regular bonuses and a potential final bonus. Their value is based on the profit we make, our investment returns and the way in which we distribute these to our customers, like your child. The bonuses are not guaranteed.
As a condition of the tax benefits, with Child Bond you also get life insurance for the child. This ensures that on death the child’s estate will receive at least the guaranteed minimum cash sum plus any locked in bonuses. You should consider if this is appropriate for the child’s financial needs. The level of cover depends on their age and your payments into Child Bond.
How it could build
Projected returns on £25 per month invested over 10 and 15 years.
Projected returns for illustration only. Remember your original investment is not guaranteed and you could get back less than the amounts shown.
Source: Scottish Friendly. Based on someone aged 6 next birthday at outset investing £25 per month. *Total amount invested over 10 years is £3,000 and over 15 years £4,500. The yearly rates of growth have been based on our reasonable estimate of potential returns and are lower than the maximum allowable investment growth assumptions. All the figures include the deduction of the actual charges assumed on the bond. These figures are only examples and the projected benefits are not guaranteed. They are based on premiums being paid for the full policy life. They are not maximum or minimum amounts; what the child gets back depends on how the investments grow. The child could get back more or less than this. Do not forget inflation would reduce what they could buy in the future with the amounts shown. (For more details on the effect of charges on the Child Bond, please see the Key Features).
Get a Child Bond
Starting a Child Bond with Scottish Friendly is easy.
Make sure you have read and understood the Key Features and ‘How we invest your money’ guide before you apply. Then you’re ready to:
- Apply online;
- Download an application form and post it to:
Scottish Friendly Assurance, FREEPOST, Glasgow G2 4BR.
If you apply, we suggest printing or saving a copy of this page, other relevant pages, the Key Features and 'How We Invest Your Money' guide.
