Testing Times

“It’s the economy, stupid!” was a phrase coined in Bill Clinton’s election campaign. Politicians neglect or mismanage the economy at their peril. Sometimes, we cannot help being caught up in global forces – traditionally originating in the US, but look out for China! It was, however, naive of Gordon Brown to claim we had abolished “Boom and Bust”, when all that had really happened was that we – both at home and abroad – had become addicted to debt.

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“It’s the economy, stupid!” was a phrase coined in Bill Clinton’s election campaign. Politicians neglect or mismanage the economy at their peril. Sometimes, we cannot help being caught up in global forces – traditionally originating in the US, but look out for China! It was, however, naive of Gordon Brown to claim we had abolished “Boom and Bust”, when all that had really happened was that we – both at home and abroad – had become addicted to debt.

Clearly, we are now suffering an exceptional “Bust”! Governments of all persuasions are introducing austerity measures, and in Europe they are coming to terms with the downside of a single currency. These things take time to manage, and it is not surprising that our new Coalition Government wants to be judged over a full 5 year parliament. Their emergency budget introduced some sensible measures, but spending cuts will bear the brunt of the burden – and many details have yet to be sorted out.

It is mixed news for savers. Certainly, saving is still encouraged by government – and many people want to save more in these uncertain times. Getting a foothold on the property ladder may well depend on saving first to a much greater extent than previously. The new government appears committed to ISAs, but the Child Trust Fund was an early casualty. As was fairly pointed out, we effectively had to borrow to make these payments to children’s accounts – increasing the burden they will face in later life!

Our ISA has now been going for 10 years, and has done well over that period. We invest in a range of assets to spread our risks. This is more important than ever, with low yields on cash and government bonds, but the degree of risk in other assets still at an elevated level.

A metfriendly ISA cashed in on 1 July 2010 would have grown by 85% over 10 years – even though the FTSE100 index actually fell over that period. Of course, these are testing times and past performance is no guide to future returns.

Our New Board

We welcomed 4 new directors onto the Board at last May’s AGM. We thanked our retiring directors, Bob Finlay, Geoff Bishop and Doug Skins, for their service on the Board – and were pleased to note that all of them continue to help the Society with its marketing work.

At our AGM, we elected:

• Peter Smyth, chairman of the Met Fed JEC to fill one of the vacancies. Our other new directors came from varied backgrounds and CVs for all of them appear on our website


• Janet Cassettari has a career in reinsurance and protection products, and has served on our Marketing Committee since 2007


• Patrick Girling has helped the Society prepare for the new approach to rudential regulation – Solvency 2 – that is being brought in across Europe


• Tim Birse is an Actuary who has just retired from a full time role at a fellow member of the Association of Financial Mutuals

The role of a director has become more onerous in recent years and we now rely on the Nomination & Remuneration Committee to propose and oversee Board appointments. It is charged with ensuring that there is a balance of skills on the Board, and that there is a healthy turnover of new directors. Current best practice in governance is to look carefully at directors who have served for 9 or more years. The Committee needs to bear in mind that all new directors have to be approved by the Financial Services Authority. It will review their relevant experience and can call candidates for interview before giving its approval. The Committee commences its deliberations on refreshing the Board in early November and it is helpful to know of interested candidates at that point – even though formal nominations are not required until mid-December.

As a Society serving the Police Service centred on London, we want to continue with a majority of our directors drawn from this base. We do not aim for representation from specific ranks, but nevertheless we do seek a balance including representation from the Police service in the City and from Police Staff. We do additionally look for skills in all our directors that will help the Society – and we support our directors in undergoing relevant training.

If you are interested in serving the Society as a Director, or if you have Finance, Audit or Marketing skills that we could put to good use on our Committees, then please contact the Secretary to the Board, Don Ratcliffe.

Deeply Critical

metfriendly now provides a range of products where critical illness cover is included, sometimes as an option. These products will pay out a tax-free lump sum on the diagnosis of any of –

• Cancer – excluding less advanced cases


• Coronary artery by-pass grafts – with surgery to divide the breastbone


• Heart attack – of specified severity


• HIV infection – caught from a blood transfusion, or physical assault in the line of duty


• Kidney failure – requiring dialysis


• Major organ transplant


• Stroke – resulting in permanent symptoms


• Terminal illness


• Third degree burns – covering 20% of the body’s surface area

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metfriendly now provides a range of products where critical illness
cover is included, sometimes as an option. These products will pay out a tax-free lump sum on the diagnosis of any of –

• Cancer – excluding less advanced cases


• Coronary artery by-pass grafts – with surgery to divide the breastbone


• Heart attack – of specified severity


• HIV infection – caught from a blood transfusion, or physical assault in the line of duty


• Kidney failure – requiring dialysis


• Major organ transplant


• Stroke – resulting in permanent symptoms


• Terminal illness


• Third degree burns – covering 20% of the body’s surface area

Our Life Insurance plans are aimed at protecting a mortgage or other large loan. They are also a means of securing a substantial level of critical illness cover. They pay out on the death of the insured person or, if selected, on the earlier diagnosis of a critical illness. Critical illness cover is expensive to provide as these claims are much more common than death claims. For example, the monthly premium for a 30 year old (next birthday) male non-smoker with cover of £100,000 for a 25 year term would be –

• £22.34 with critical illness included


• £7.23 for death benefit only

Our Income Protection policy also includes cover against the same critical illnesses, with a benefit of 6 months’ pensionable salary. The main benefit of income protection is the payment of regular and lump sum benefits during half pay, no pay and during medical retirement (subject to conditions). It is another way to supplement a mortgage protection policy, enabling you to keep up the loan repayments, regardless of the nature of the accident or sickness causing you to be off work. To give an example, the cost to a male non-smoker constable at the top of his pay spine (pensionable salary of £38,796 from September including London weighting) would be £14.55 per month. Cover continues throughout service (or until age 60).

We are currently reviewing our income protection benefits and will be writing to members who hold the current version of this plan. We will be covering the above critical illnesses only, and will be restricting the no pay benefit period to a maximum of 2 years (except where the policy terms add to this coverage). We will be improving benefits for those members who also hold the Federation’s Regulation 28 cover, by adding a return to work benefit equivalent to the benefits withheld due to overlapping coverage. Medical Retirement benefits where covered) will be a minimum of 6 months’ pensionable pay – improving the terms for those who are able to move quickly into alternative work

Our new Critical Illness and Medical Retirement plan is aimed at younger officers. In order to keep down costs, it only provides cover up to age 45. It provides a benefit of 6 months’ pensionable pay. As with Income Protection, the Medical Retirement benefit is restricted to physical (not mental) conditions. For a non-smoker constable on the top of his or her pay spine, the monthly premium is £4.36 until age 35 and £7.27 thereafter, for a benefit of £19,398.

We recommend that officers keep their protection needs under review and consider the improved benefits from comprehensive Income Protection – perhaps when they reach age 35, perhaps on promotion.

Police Healthcare Scheme

metfriendly is pleased to announce that we are now promoting the Police Healthcare Scheme (“PHS”). We used to provide private medical insurance ourselves, so we know something about this market!

This year we decided to close our old scheme, but in doing so we wanted to give our members a good alternative that we were confident would deliver. PHS are the biggest provider of private healthcare within the police market and they have been going for over 30 years. No two schemes are the same, but one feature we found particularly attractive about PHS was that they maintained competitively priced cover into retirement. PHS also gave a commitment to waive their normal “treatment free” condition for our former members where we did not have any exclusions that would have applied.

One major advantage of the PHS scheme is its simple application – there are no medical questions and acceptance is guaranteed. If you have had a medical condition, then PHS will cover this after 2 years, provided you have been free of treatment during that period. You can find out more on the Police Healthcare website, or here.

PHS is welcoming our members by offering them their first 12 months for the price of 9. Do tell PHS that you belong to metfriendly when you contact them.

Taxfriendly Products from your Society

ISA
Our ISA is a tax-efficient means of investing in our with-profits fund – with adults able to invest £10,200 every tax year (£10,680 for tax year 2011/2012) – which can be a mix of regular saving and lump sums. We welcome transfers from other providers by giving a 1% up-front bonus. Transfers from previous years’ ISAs do not count towards this year’s limit.

The metfriendly ISA is classified as “Stocks and Shares”. This means you can have a Cash ISA as well. It also means we can accept transfers from all other ISA providers. Many of our members have brought their Cash ISA funds to us because the rates they were getting were so poor. It was not just a case of falling interest rates – many cash rates were dismal after the introductory period had passed. Cash ISA providers are now under pressure to be more transparent and reveal their rates annually, but it is yet to be seen whether they will improve their terms.

Children’s Savings Plan
The Child Trust Fund was a tax-efficient opportunity for parents, grandparents and other sponsors to save for a child. Now, it is more difficult to provide for a child’s future and it is particularly difficult for a parent to do so tax-efficiently.

Fortunately, Friendly Societies can offer tax-efficient regular savings for up to £25 per month – and that includes plans for children, whoever pays!

The metfriendly Children’s Savings Plan can be taken out at any age up to 15, and goes through to age 25 – with options to cash in early at 18 or 21 (if 10 years have then been paid). It is invested in our with-profits fund, with bonuses added every year, and a final bonus when it pays out.

Apply online - it's that simple

Over the last few months, we have greatly expanded the range of our products which can be applied for online or by telephone. This has already proved a hit with many of our members, but we appreciate that others will prefer to study a brochure and/or fill in a traditional application form.

Everything contained in our brochures is reproduced on our web pages – giving you the choice! We are conscious of the environment and always use recycled paper whether it be for newsletters or for marketing material.

After applying online or by telephone, we will send you a copy of your application for confirmation. For new members, or where we rely heavily on the answers you give to health questions, or for some ISAs to satisfy HMRC requirements, we will ask you to sign and return the printed form.


Whether or not we need a signed form from you, we will always send you a notice informing you of your cancellation rights, and giving you a personal illustration along with key features of the product you have chosen.

Warren Family Gala Day

Staff from metfriendly attended the South East Area Family Gala Day on the 4 July and, as you can see, our stand went down well with those in attendance. Our team handed out goody bags to the adults and balloons and stickers to the children. We also held two prize draws on the day - a luxury hamper for the adults and a “guess the number of sweeties in the jar” competition for the children. Both were very popular, with a large number of entries coming from non-members, thereby proving this event is an excellent way of raising the profile of your Society. As you can see, the winners were extremely pleased with their prizes too.