Recent changes to the PPFM
The Principles and Practices of Financial (PPFM) are reviewed by the Board regularly, and the most recent changes agreed are summarised below. The current (July 2020) version of the PPFM is available here.
The PPFM has been updated to include a new version of the Monthly Savings ISA product which applies to all Monthly Savings ISA policies issued from April 2020 onwards. This product is different from the Monthly Savings ISA issued between 2016 and March 2020. The Principles and Practices have been updated to distinguish between the two versions of the product. The main differences are:
- Monthly Savings ISA policies issued between 2016 and March 2020 are issued under Tables 29 and 30.
- Monthly Savings ISA policies issued from April 2020 are issued under Tables 32 and 33.
- Monthly Savings ISA policies issued between 2016 and March 2020 only have annual bonuses and no final bonus. Accordingly, the annual bonus rate for this plan will normally be higher than for other single/recurrent premium plans. Monthly Savings ISA policies issued from April 2020 have the same annual and final bonus rates as the Lump Sum ISA.
- For surrenders of Monthly Savings ISA policies issued on or before March 2020, the accumulated sum assured is reduced by a charge during the year of subscription of one month’s premium.
- For surrenders of Monthly Savings ISA policies issued from April 2020, the accumulated sum assured is reduced by a charge where surrender occurs in the first two years of a contract. The charge is currently 5% of the accumulated sum assured where surrender occurs in the first year of a plan and 3% where surrender occurs in the second year of a plan.
Changes made in January 2020
The practices have been reviewed to remove redundant wording, to improve clarity with no material changes to the principles, and to update them to reflect:
- The removal of the market value reduction subsidy for all business written from 1 January 2020 and the reduction in the charge that is made to assets shares in respect of the expected cost of this guarantee. This reflects a change following the Society’s move to an investment strategy which is designed to more actively mitigate downside market risk and enables the Society to continue to write increasing volumes of new business whilst remaining financially strong. For ISA business written on recurrent premiums, a new policy is issued for each tax year which means that any contributions made to these ISA policies from the 2020/21 tax year onwards do not have the market value reduction subsidy.