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.

(view full article)

“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

(view full article)

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.

Notting Hill Carnival

For the fourth year running, metfriendly staff attended Carnival, setting up a stall at the largest of the Operational Feeding Centres. As with previous years we handed out a competition flyer and this proved very popular with many entries being received on the day, again confirming this is an excellent way of raising the profile of your Society. For those of you who entered the competition, the draw has now been made and the names of the winners are available on the competition pages of our website www.mpfs.org.uk.

Member-get-member

It’s been almost a year since we launched our member-get-member campaign, and we are pleased to report that we are seeing an ever increasing number of new members joining metfriendly. It is clear from the feedback we regularly receive that almost 50% of those joining your Society do so by way of colleague recommendation.

We improved the incentives in May and now anyone introducing a colleague will receive £20.00 in Love2Shop gift vouchers. These are accepted at over 20,000 top UK stores, restaurants and attractions across the UK – such as Argos, Boots, Debenhams, HMV, House of Fraser, JJB Sports, Marriott Hotels UK, Alton Towers Resort – so everyone will find something they love with their voucher. If you introduce a family member you will receive a free Bobby Bear. Full Terms & Conditions are available on our website www.mpfs.org.uk.

Extra 1% Offer

Due to its popularity, the Society is keeping open its ‘extra 1%’ offer for large lump sums (£25,000+) and ISA transfers (any amount).

You can transfer both Cash ISAs and Stocks & Shares ISAs into our ISA. Full details available here and our other promotions are available on the promotions page of our website.

Your Views Count

Customers Fairly initiative very seriously and as always we value your feedback on the products and services we provide. We would therefore like to encourage you to either email or write in with your comments concerning this Newsletter or anything else you wish. You can email us at feedback@mpfs.org.uk or write via our external or despatch addresses.

To change - or not to change

Did you know that members of your family qualify to take advantage of the metfriendly savings, investment and protection products?

Did you know that by simply introducing a colleague or family member, you are thanked with a ‘bonus’ gift?

Did you know that ALL police staff are welcome to join? Many believe that it is only serving police officers – not
true. ALL police staff and volunteers are welcome.

Is every member of the Met Federation aware of who we are and what we can do for them?


Ron Tyler of Marketing Integrity explains how his firm has helped your Society adapt to modern times.....

(view full article)


In October 2009, the Board of the Metropolitan Police Friendly Society decided that the time was right to re-evaluate their image and communications with both their highly valued existing membership and potential new members. As a result, we were
invited to advise on the project.

As an experienced marketing consultancy, we recognise the importance of a brand and, more importantly, the culture and philosophies of the client behind that brand. The core values of the Society were easily identified as transparency, trust and high
service values. Their reluctance to do anything to harm their relationship with existing members led to much heart searching as we proposed change. But change there had to be!

In common with all affinity groups, there is always a dual function: look after existing, loyal members and to attract new members in order that the organisation can survive and continue to provide the highest service levels to all. Many
traditional organisations face the problem of how to attract the younger generation who, with the internet, social networks, texting and twittering, have so many alternatives vying for their attention.

So, how do we ‘freshen’ the image to attract new but not alienate those that have grown to identify with the ‘old’ image?

We started with the name. Metropolitan Police Friendly Society is quite a mouthful. The answer was to take a word that was instantly known - Met and the word that best described the ethos of the organisation - friendly. Hence ‘metfriendly’ became the new name.

All strong brands are represented by a familiar image - the logo - and this was the next thing to address. Clues were evident for the colours chosen - Met blue and City of London red. Introducing a part of the shield just helped with the immediate link to the police heritage.

Now, how to get this new image to a level of awareness and, hopefully, speedy recognition that this new ‘metfriendly’ is still the ‘old’ MPFS – same values, same principles, same service for existing members but, perhaps, a little more modern and
attractive to potential new members.

In today’s society, the website is king. It can be a great source of reference for those wanting an instant answer to a query. To many, the ability to research, enquire and even apply on-line is a must. Certainly new ‘20 something’ recruits would expect to be able to do this.

Little did we know at the time that the recruitment programme was about to change radically – making it even more important for us to attract new members.

So – website, new stationery, new brochures, new style advertisements in the key police publications – all designed to bring a ‘friendly’ but professional image to the attention of members and prospective members.

Meantime, the in-house marketing team have been working on other important aspects of communication with updates for AWARE, meetings with Met Federation Reps, sponsorship of Passing Out Parade programmes at Hendon, Warren Gala Day, Notting Hill Carnival etc.

The Board have been innovating new products and ensuring enviable performance figures on savings and investments and introducing a new health protection
product.

What has this got to do with marketing and rebranding? I hear you say.

symbolism is merely tip of the iceberg with every part of the operation coming together to form something that members want and potential members would like
to be part of. The brand can also develop a powerful sense of belonging among employees.

In truth, we hope that this exercise has re-enforced the trusted image with loyal members whilst, perhaps, looking a little more ‘today’ to attract new members to take advantage of what metfriendly has to offer. There is still work to do;


Did you know that members of your family qualify to take advantage of the metfriendly savings, investment and protection products?


Did you know that by simply introducing a colleague or family member, you are thanked with a ‘bonus’ gift?

Did you know that ALL police staff are welcome to join? Many believe that it is only serving police officers – not
true. ALL police staff and volunteers are welcome.

Is every member of the Met Federation aware of who we are and what we can do for them?

So, members can be assured that we are as we have always been – but we want to encourage new intake also – for the benefit of all.

Friendly Financials

The Society's accounts will be available in early April which will show that we had a successful year in 2009. In the meantime, we would draw your attention to the following:

• New lump sums invested with us exceeded £2.3 million, over 40% up on 2008 – beating all previous years.
• Our assets produced a total investment return of over 10%.
• Our funds increased from £78 million to £84 million

Your Board places a continuing emphasis on financial strength, as we believe this helps our members to feel confident in saving with us in these uncertain economic conditions. We look to spread our investments both widely and wisely. We increased our exposure to commercial property at the end of 2009, using a number of unit trusts – all of which went to an early profit. The star performers in 2009 were UK Equities and Corporate Bonds.

Our strong performance, aligned with the Board’s decision to enhance pay-outs, has served to increase the returns to our members. These are listed on our website under ‘With Profits/Past Performance’. As an example, a lump sum invested 10 years ago has grown by 75%. If it had been placed in an ISA, the growth increases to 83%.

It’s ISA time – hurry!

• Each tax year, you may have 2 ISA providers, one for “Cash”and one for “Stocks & Shares.” Our ‘metfriendly’ ISA isinvested in the with-profit fund and counts as a Stocks and Shares ISA
  

• You can save up to £10,200* between the two ISAs (up to£5,100* in Cash), or you can put it all in Stocks & Shares

• *These limits apply to everyone from 6th April 2010, but until then, only to those who were born on or before 5 April 1960. Those born after 5 April 1960 can, until 6 April 2010, only pay in up to £7,200 between the two ISAs (up to £3,600 in Cash)

• There are, however, no limits on how much you can transfer into an MPFS ISA from other ISAs – we will take funds from other Stocks and Shares ISAs (which includes former PEPs) and from Cash ISAs (which includes former TESSAs)

• See our website (www.mpfs.org.uk/promotions) for details of a special offer we are currently running for anyone transferring their ISA to us.
  

Extra 1% Extended Offer

The Society is extending its extra 1% large lump sum offer to include ISA transfers of any amount. You can transfer both Cash ISAs and Stocks & Shares ISAs into our ISA.

Look out for your Bonus Statement

Separate statements will be issued to every member and will include a breakdown of regular premiums – including Protection Policies. If you are paying premiums for a partner, then they will get their bonus statement sent to them directly at their home address, where our records permit. We will indicate what you pay us in respect of your partner and/or children.

Why are there different bonus rates for different plans (tables)?

For some tables, the With-Profit Bond, the ISA and the Flexible Savings Plan, the Benefit or Sum Assured is based on what you have already paid us. For most tables, however, the Sum Assured is based on what you will pay us over the term of the plan. Therefore, the profits we earn on each type of table are different.

How do you calculate bonuses?

The bonus we add each year is a consistent way of distributing a pre-tax investment return of, currently, about 3.5% per annum. On average, we earn more than this – and the excess is distributed as a final bonus at maturity or on encashment. We also reflect any return of our capital to members in the final bonus.

When do you pay a final bonus?

If you pay us a lump sum, including any ISA contributions, then a final bonus may be payable on or after the third anniversary. Regular contribution contracts attract a final bonus from the fifth anniversary onwards. Final bonuses are not only included in maturity and death claims – they are also included in our calculation of surrender values.

Can the final bonus be negative?

Yes, we have to reflect the return we make on our investments, even in bad times, so we may adjust surrender values downwards – but not maturity values or death claims. In particular, lump sum investments held for less than 10 years could be reduced by a “market value reduction” (MVR) – effectively a negative final bonus. The Society does not currently apply an MVR but reserves the right to do so. MVRs were applied between October 2008 and September 2009 but only for contracts written in 2006, 2007 and 2008.

www.mpfs.org.uk/bonusguide

New Year - New Look

We thought it was time to look afresh at our brand. Many societies have shortened their name in recent years – and we had to admit that “Metropolitan Police Friendly Society Limited” is a bit of a mouthful. We won’t be abandoning our full name, but many members know us as ‘metfriendly’ and we want to build on that.

Our new logo not only uses this name, but also points to our connection with the police service by using the image of the police badge. We have also chosen to introduce the colour red to reflect our historic links with the City of London service. But we accept members from all over the UK provided they are part of the Police Family – we hope that our “new” name will not deter anyone!

Throughout 2010, we will be redesigning our brochures and other literature. If you have any comments on the brochures we would be pleased to hear from you. We want to take our members’ views into account as we proceed to replace our literature.

Protect your income - it really can happen to you

You may not realize this but (according to MPS HR) 9 out of 10 police officers are likely to be injured in the line of duty. We are pleased to say that the vast majority of these will be minor, but that isn’t always the case. You are fortunate that the police service will keep you on full pay for 6 months and can exercise discretion when it comes to half pay and no pay, although this discretion does not normally apply to injuries that occur outside work, or if you are ill. Where there is no prospect of a recovery, medical retirement is a real possibility and even with an enhanced pension, you are likely to suffer a considerable loss of income.

For many years, the Society has offered an Income Protection product designed to bridge the gap between half pay, no pay and medical retirement. The policy in its current form includes 3 additional lump sum payments of a month’s pensionable pay, paid when you progress onto half pay, no pay, and in medical retirement when you gain alternative employment. During the period of half pay you receive 30% of the insured pensionable salary, and this increases to 60% during no pay, with no reduction for any state benefits. The income paid during medical retirement for a physical (not mental) condition amounts to 50% of the shortfall between your gross un-commuted pension and your pensionable pay prior to medical retirement. Benefit is payable until you are able to get alternative work or potentially to age 60.

In addition to the above benefits there is a lump sum critical illness benefit of 6 months’ pensionable pay. Full details of the conditions covered are listed in the policy document on our website.

Child Victims of Crime

A big thank you to everyone who donated money to the ‘Child Victims Of Crime’ charity in exchange for a Bobby Bear last year, you helped the Society raise almost £12,000 for the charity.

We still have a number of the caramel and dark brown bears available should anyone be interested in obtaining one.

Trusts don't have to be taxing

You may have a ‘metfriendly’ life assurance plan (either level term assurance or decreasing term assurance) in place, perhaps if you have a mortgage, or to safeguard dependents who rely on you financially. You may be considering starting such a plan? You should, of course, always keep your Will up to date, but had you considered the benefits of putting your life assurance policy in trust?

1. Gets the money when it is most needed. If the policy is placed in a trust, the trustees don't have to wait for probate to be granted so the life insurance payment will go to the chosen beneficiary/ies without delay;


2. Protects assets from third parties. Without a trust, the life insurance payment will be added to assets within your estate when probate is granted. This means that the life insurance payment could be used to pay any debts that are outstanding on death. With a trust, the trust assets do not belong to you and so cannot be used to pay off any outstanding debts;


3. Reduces potential inheritance tax liability. If the life insurance isn't placed in a trust it automatically becomes part of your estate, which could increase the chances of inheritance tax being due. Putting the life insurance policy in trust may mean that inheritance tax can be reduced;


4. If you leave behind children under the age of 18, the trustees could use the trust to support them. Once they turn 18 they can have full access to the money in the trust.

Up until now, you would have needed to consult a Solicitor to set up a trust for your ‘metfriendly’ policy, but your Society is planning to offer a straightforward trust wording later this year which you will be able to use, whether you are applying for a policy or already have one with us. Watch for an announcement on our website or email us now if you have an existing policy.

If your plan is a “Joint Life” one, you are less likely to need a trust, as, on the death of either of you, the policy will speedily pay the benefit to the survivor on proof of death, without having to wait for probate, and without going into your estate, so there would be no Inheritance Tax on it.