Scottish Friendly launches invesment plan for bank of Gran and Grandad
Scottish Friendly, one of the UK’s leading mutual societies, has launched a new investment for grandparents looking to put money aside for their grandchildren.
The Grandchild Flexible Plan continues Scottish Friendly’s tradition of innovation in the family savings genre of investment products.
Increasingly in the current economic environment, the older generation are playing an important role in helping young family members financially; from contributing to university fees, to helping them onto the property ladder. The Grandchild Flexible Plan enables grandparents to invest between £15 and £25 a month tax-free over an 18 year duration - but with the flexibility to exit after 10 years.
As a friendly society tax-exempt Savings Plan (TESP), as long as the money is invested for a minimum of 10 years, under current tax law the plan grows free of income and capital gains tax.
Grandparents can take out the plan for as many grandchildren as they like provided the grandchild does not already invest in a friendly society tax-exempt investment.
Neil Lovatt, Sales and Marketing Director at Scottish Friendly commented:
Following research we carried out, we realised that families are keen to do what they can to help their children and grandchildren prepare for their financial future. We’ve launched this new flexible plan with the aim of providing a low cost long term investment plan to help grandparents put money aside regularly for their grandchildren.
Although grandparents can contribute to a Junior ISA, their payments are simply added to those of other family members. The Grandchild Flexible Plan on the other hand allows grandparents to build a pot of money for the child that will be a special gift just from them.
The announcement marks another step of product evolution for Scottish Friendly, who last year launched an entire range of family flexible savings products online, which have proved to be extremely popular with personal investors. In the last year, the range contributed to a 16% rise in online sales. The Grandchild Flexible Plan complements this range of TESPs.
Charges are limited to a 1.5% annual management fee plus a small cost for integrated life cover. Investments are linked to a UK stock market tracker fund. The value of stock market investments can go down as well as up and investors may get back less than the amount invested. If the plan is cashed in early, a tax payment may be due.