The move is part of its plans for expansion under legislation allowing friendly societies to diversify into a range of new activities. Others have plans that include management of unit trusts and PEPs, offering loans, acting as insurance brokers and even running private hospitals, sheltered housing schemes and homes for the elderly.
Members of Family Assurance voted on 20 April to allow the society to incorporate, a technical step to enable it to set up subsidiaries offering new services. The move does not affect the society's mutual status.
The society had set up a PEP and investment management company, called Family Equity Plan, in 1989 to launch its own unit trust and PEP, but it was prevented under the old friendly society legislation from operating the company as a subsidiary, and there was limited scope for the two organisations to share costs.
Now, the society plans formally to take over the Family Equity Plan business and expand its activities.
John Reeve, the society's chief executive, said this would allow cost-cutting, the main benefit of which will be directed at its 530,000 existing customers - most of whom have invested in its tax-exempt Family Bond 10-year savings plan.
From July these people should be able to invest in the PEP for pounds 7 a month upwards. At present the minimum in the PEP is pounds 25 and this will remain the case for people who do not invest in a Family Bond.
The PEP money goes into Family Asset Trust, a unit trust launched in 1991 and investing in companies that supply basic family needs, such as food, clothing, healthcare and energy supplies. It has got off to a good start, ranking first in a sector of 36 trusts over two years to 1 April, according to figures from Finstat. Investors have made a profit of more than 36 per cent after expenses.
Family Asset has an initial charge of 5 per cent and an annual charge of 1.5 per cent. There are no additional charges for investing through the PEP, and Mr Reeve said Family Bond investors might be offered discounts from July.
Despite the changes for the friendly societies, the ceiling for contributions to their traditional tax-exempt schemes remains pounds 18 a month - a curb that affects returns, because of the costs of administering schemes taking in such small amounts.
Peter Gray, chief executive of the 112-year-old Tunbridge Wells Equitable Friendly Society, and secretary of the parliamentary committee of the National Conference of Friendly Societies, lobbied hard for the new powers. Tunbridge Wells already markets conventional endowment policies, investing in taxable funds alongside tax-exempt friendly society products, and has a formidable reputation for returns to policyholders.
Mr Gray hopes to improve these further by expanding into insurance broking, a new investment trust, and management services to other societies. The broking business, which he hopes to set up next year, would offer discounted household, motor and other insurance to the society's 200,000 members.
Homeowners Friendly Society is looking at a range of diversification options, including ventures in sheltered housing and residential care. No final decisions have been made, but incorporation will be put to members in a vote on 26 May.
Royal Liver Assurance will ask its members to vote on 12 May. Like Tunbridge Wells, it is interested in insurance.
Liverpool Victoria Friendly Society, now launching a tax-exempt savings plan after concentrating on taxable plans for more than 10 years, hopes to incorporate in October.
One society that does not have its mind on expansion is the Lancashire & Yorkshire. It is still awaiting a court ruling on whether it should compensate investors for putting their money into property when this was not specifically permitted under their policies.
The society hopes that the uncertainties will be resolved by July, but the possibility that it may seek a merger with another society cannot be ruled out. It is not taking on new business at present.
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