The below is a guide only, for further information please ensure you read the Wealth Plus Product Disclosure Statement (PDS).
How does my investment help the community?
Through our investment decisions, we believe that collectively we can play a role in influencing change towards a more sustainable financial market where companies approach to managing environmental, social and governance risks should result in a more stable market, creating long-term success for companies who deal with these issues and ultimately long-term, sustainable returns for our members.
As such, Wealth Plus Balanced, Growth and High Growth investment options use responsible investment principles of company engagement to positively influence company behaviour, and negative screening to exclude direct investments in certain sectors, companies or practices based on ethical norms.
We also donate 10 basis points (0.10%) from the management fee into the Foresters Financial Community Grants Account which is specifically used to grant money to organisations that will create lasting positive social change within the communities in which we all belong.
How much can I invest each year?
There is no limit on your contribution to your policy in the first year, you can contribute whatever you wish in this first year as this will set your benchmark for the following years’ maximum contributions. Each subsequent year’s contributions can be up to a maximum of 125% of the previous year’s contributions in order to qualify for tax free withdrawals at maturity – this is also known as the 125% Contribution Rule.
What is the 10-Year Tax Rule?
The 10 Year Tax Rule means the income component of your withdrawals from the Fund are tax-free after 10 years so long as you meet the 125% Contribution Rule. After meeting the 10 Year Tax Rule and the 125% Contribution Rule, when you make a withdrawal from the Fund, any income is not assessable income and therefore does not need to be declared on your personal income tax return.
Income in the Fund is taxed at the company tax rate (currently 30%) and paid for by Foresters Financial. As an investor, you do not need to declare any income received on your investment in your tax return or keep any capital gains record whilst you are invested in the Fund.
What happens if I need the funds before 10 years?
You can access your investment at any time. Any withdrawal within the first 10 years will result in some level of assessable income. The investor will need to declare the assessable income in their personal tax return in the year it was withdrawn. You will receive a tax offset amount equivalent to the tax paid by Foresters Financial in the Fund.
What is the 125% Contribution Rule?
In order to receive investment earnings tax-free after 10 years, you must meet the 125% Contribution Rule. This rule defines the contribution amounts you can make each year into your investment bond. In your first year of your policy, your contribution amount is uncapped. However, from the second year onwards, your contributions each year cannot exceed 125% of the previous year’s contributions.
There is no limit as to the amount you can invest in the first year of your policy; this will set your benchmark. Each following year you can make the same contribution you did the previous year plus an additional 25%, therefore totalling 125%.
If you contribute more than 125% of your previous year’s contributions, the start date of the 10 Year Tax Rule will be reset for tax purposes. This means that in order to withdraw your funds tax free, you will need to keep your investment for a further 10 years from this new start date. You can still withdraw your funds, but the income component or your withdrawal will be assessable income. Similarly, if you stop contributing for a year, the next time you make a contribution a new 10-year period will commence from the date of that contribution for tax purposes. Setting up a regular savings plan is one way to avoid worrying about restarting your 10-year term to obtain the tax-free benefit.
How will I know when I am approaching the 125% rule? Will you notify me?
We will notify you before the end of your policy anniversary to remind you about your annual contributions and the 125% Contribution Rule.
When can I access my money?
You can access your money at any time, however if you do so prior to 10 years you will not gain all the tax paid benefits and may be liable to declare the assessable income in their personal tax return in the year it was withdrawn.
Is there a minimum amount I can withdraw?
All accounts are flexible and allow you to withdraw your money at any time, however if you choose to do so prior to 10 years it may be subject to tax implications if made within the first 10 years.
- You can set up regular withdrawals to provide an ongoing income stream at any time – after meeting the 10 Year Tax Rule they will be tax free (subject to maintaining a minimum balance of $500); or
- You can withdraw your policy balance in full or partially withdraw (subject to a minimum balance of $500) at any time.
What is the tax rate?
The Fund pays tax on investment earnings at the current company tax rate of 30%. Whilst invested in the Fund, investors do not need to record investment earnings on their personal income tax returns.
How does a Regular Savings Plan work?
You can setup a regular savings plan from as little as $60 per month subject to the 125% Contribution Rule with no limit on contributions in the first year. We offer a broad range of contribution methods (direct debit, BPAY® or Cheque), including our automatic 125% Savings Plan.
When are unit prices declared?
Unit prices are currently calculated at the close of business of the last day of the current month (the valuation date). Transaction costs will be added to buy prices and deducted from withdrawal prices.
Unit pricing does not apply to the Savings & Investment Capital Guaranteed Fund. For our unit linked funds; the Balanced, Growth and High Growth investment options, a unit price is calculated by dividing the fund’s net asset value by the number of units on issue. Unit pricing information will be available on our website.
Who can invest?
Wealth Plus can be taken out by an individual or in joint names, a child aged between 10 and a under 16 years old (with parental or guardian permission), a company or a trust. The listed individual(s) will become the legal policy owners and named Life Insured unless otherwise specified.
As part of Wealth Plus you also have the ability to nominate your beneficiaries and/or transfer ownership at any time.
Can I nominate my beneficiaries?
If you, as the investor, are also the life insured, Wealth Plus allows you to nominate one or more beneficiaries (provided you are at least 16 years of age) to receive the investment proceeds from your policy in the unfortunate event of your death. The proceeds will be paid directly to your beneficiaries, tax-free, and not through your estate. This offers peace of mind by avoiding any unnecessary complications such as not having a will, waiting for probate or a will dispute.
You can change or cancel your nomination at any time. Where a nominated beneficiary passes away before the life insured, the investment proceeds will be allocated to the remaining beneficiaries in the same weighted proportions, or in the case of a sole beneficiary, the investment proceeds will form part of your estate.
What happens to my money in Wealth Plus if I die?
Typically, if you are the sole Policy Owner and the named Life Insured, upon your death proceeds of your investment bond will be transferred to your nominated beneficiary(s), if selected, otherwise it will be passed onto your estate.
In the event of a joint ownership, upon the death of the first joint Policy Owner, the policy transfers to the surviving Joint Policy Owner and they become entitled to the full investment proceeds unless a beneficiary(s) has been nominated. The policy matures on the death of the last surviving Joint Policy Owner, or in the case of a different Life Insured upon the death of the Life Insured.
Can I take this out on behalf of a child?
Yes, a child aged between 10 and under 16 years old is able to take out a policy in their name with parental or guardian consent. A child who is a policy owner is not allowed to make investment decisions, which includes switching, nominations or transfer of ownership. A child will be the Life Insured listed on the policy. In the unfortunate event of a child passing away, the investment proceeds will be distributed tax-free to their estate.
What if I change my mind – is there a cooling off period?
If you are new to the fund then you are entitled to request in writing the cancellation of the policy within thirty (30) days upon receipt of confirmation of your policy.
If you are switching investment options then no cooling off period applies.
Are there fees for switching between the investment options?
You can easily switch between all four (4) investment options to suit your personal circumstances. Please note that you will need to keep a minimum of $500 per investment option. There are no switching fees but transaction costs (known as buy/sell spreads) may apply.
Will I pay an investing transaction cost (ITC) for every contribution?
Unit prices are calculated at the close of business of the last day of the current month (the valuation date). Transaction costs will be added to buy prices and deducted from withdrawal prices. These fees are determined by the underlying investment and will be deducted from the applicable investment amount and incorporated into the unit price where applicable and are estimated up to 1.0%.