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Friendly Societies Act 1974

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This is the original version (as it was originally enacted).

Benefits: limitations and payment

64Maximum benefits

(1)Subject to section 65 below, a member, or person claiming through a member, of a registered friendly society or branch shall not be entitled to receive from any one or more such societies or branches (taking together all such societies or branches throughout the United Kingdom)—

(a)more than £500 by way of gross sum under tax exempt life or endowment business,

(b)more than £104 a year by way of annuity under tax exempt life or endowment business,

(c)more than £5,000 by way of gross sum under life or endowment business which is not tax exempt, but increasing that limit from £5,000 to £7,250 if the entitlement under this paragraph, so far as it exceeds £5,000, is under any mortgage protection policy or policies,

(d)more than £500 a year by way of annuity under life or endowment business which is not tax exempt.

(2)In applying the limits in this section there shall be disregarded—

(a)any bonus or addition declared upon assurance of a gross sum or annuity,

(b)any approved annuities as defined in section 226(13) of the Income and Corporation Taxes Act 1970 or any policy of insurance or annuity contract by means of which at the date on which it was issued, or, as the case may be, entered into, the minimum benefits of a recognised occupational pension scheme under Part II of the Social Security Act 1973 were secured, and

(c)any increase in a benefit under a friendly society contract, as defined in section 6 of the Decimal Currency Act 1969, resulting from the adoption of a scheme prescribed or approved in pursuance of subsection (3) of that section.

(3)The Chief Registrar may by order made with the consent of the Treasury and contained in a statutory instrument, subject to annulment in pursuance of a resolution of either House of Parliament, from time to time increase or further increase all or any of the limits in paragraphs (c) and (d) of subsection (1) above, and any such order may contain transitional and other supplemental provisions.

(4)Subject to subsection (5) below, the rules of any registered friendly society or branch may within six months from the time when any increase is effected under subsection (3) above be amended by resolution of the committee so as to permit the society or branch to assure additional amounts within the limits prescribed by virtue of that increase.

(5)If, after any increase is effected under subsection (3) above, any amendment of the rules of a friendly society or branch is made otherwise than under subsection (4) above, the power of the committee thereof under subsection (4) above shall determine on the date on which the amendment is registered.

(6)A registered friendly society or branch may require a member, or person claiming through a member, to make and sign a statutory declaration that the total amount to which that member or person is entitled from one or more registered friendly societies or branches (taking together all such societies or branches throughout the United Kingdom) does not exceed the limits applicable by virtue of this section.

(7)In this section references to registered friendly societies or branches throughout the United Kingdom shall be construed as including references to friendly societies or branches registered, or deemed to be registered, in Northern Ireland under any enactment of the Parliament of Northern Ireland or any Measure of the Northern Ireland Assembly corresponding, in either case, to this Act.

(8)In this section—

  • " life or endowment business " and " tax exempt life or endowment business " have the meanings assigned to them by subsections (2) and (3) respectively of section 337 of the Income and Corporation Taxes Act 1970; and

  • " mortgage protection policy " means a policy of assurance of a gross sum, the whole or the major part of which is applicable solely for the purpose of meeting payments due under a mortgage or charge of land.

65Modification of s. 64 in relation to group insurance business

(1)For the purposes of section 64 above, the limits in paragraphs (c) and (d) of subsection (1) of that section shall apply separately in relation to the amounts which may be received—

(a)by way of group insurance business; and

(b)by way of other business.

(2)For the purposes of this section " group insurance business " means the business of providing, in accordance with the rules of a registered society, benefits for or in respect of such employees of a particular employer or such other group of persons for the time being approved for the purposes of this section by the registrar as are members of the society ; and such business is approved group insurance business if—

(a)the policy of insurance or other contract under which the benefits are provided for or in respect of each of the employees or other persons concerned is in a form approved by the registrar, and

(b)such other requirements as may be prescribed by regulations made by the Chief Registrar are fulfilled.

66Power of member to nominate person to receive sums payable on his death

(1)Subject to the following provisions of this section, a member of a registered society or of a branch thereof who is not under the age of sixteen years may, by writing under his hand delivered at or sent to the registered office of the society or branch, or made in a book kept at that office, nominate a person or persons to whom any sum of money payable by the society or branch on the death of that member or any specified amount of money so payable shall be paid at his decease.

(2)The total amount which may be nominated under this section shall not exceed £500, but where a nomination under this section does not specify the maximum sum of money which is to be payable by virtue of the nomination, and the sum to which the nomination relates exceeds £500 but would not exceed that amount if any such increase as is mentioned in section 64(2)(c) above were disregarded, the nomination shall not be invalidated by reason only of the excess.

(3)The sum payable on the death of a member by a registered society or branch shall include sums of money contributed to or deposited in the separate loan fund and any sum of money accumulated for the use of the member under the provisions of this Act, together with interest thereon.

(4)Any reference in subsections (1) to (3) above to a registered society does not include a benevolent society, a working men's club or an old people's home society.

(5)A person nominated under this section must not at the date of the nomination be an officer or servant of the society or branch, unless that officer or servant is the husband, wife, father, mother, child, brother, sister, nephew or niece of the nominator.

(6)A nomination so made may be revoked or varied by any similar document under the hand of the nominator delivered, sent or made as mentioned in subsection (1) above.

(7)The marriage of a member of the society or branch shall operate as a revocation of any nomination previously made by that member under this section.

(8)A nomination, or a variation or revocation of a nomination, by writing under the hand of a member of a registered branch and delivered at or sent to the registered office of that branch, or made in a book kept at that office, shall be effectual notwithstanding that the money to which (the nomination relates, or some part thereof, is not payable by that branch but is payable by the society or some other branch.

67Payment on death of a nominator

(1)Subject to subsection (2) below, on receiving satisfactory proof of the death of a nominator, the society or branch shall pay to his nominee or nominees the amount due to the deceased or, as the case may be, the amount specified in the nomination.

(2)Subject to paragraph 12 of Schedule 10 to this Act, the total amount paid by a registered society or branch by virtue of a nomination (whether in favour of one nominee or more) shall not exceed £500 except that, in the circumstances referred to in subsection (2) of section 66 above, the amount payable shall include the excess referred to in that subsection.

(3)The receipt of a nominee over sixteen years of age for any amount paid in accordance with this section shall be valid.

68Devolution of sums due where no nomination

(1)If any member of a registered society or branch entitled from the funds thereof to a sum not exceeding £500 dies without having made any nomination thereof then subsisting, the society or branch may, without letters of administration or probate of any will or, in Scotland, without any grant of confirmation, distribute the sum among such persons as appear to the committee, upon such evidence as they may deem satisfactory, to be entitled by law to receive that sum.

(2)If any such member is illegitimate, the society or branch may pay the sum of money which that member might have nominated to or among the persons who, in the opinion of the committee, would have been entitled thereto if that member had been legitimate, or if there are no such persons, the society or branch shall deal with the money as the Treasury may direct.

(3)Where at the time of his death a member of a registered friendly society or branch is entitled from the funds thereof to a sum which exceeds £500 but would not exceed that amount if any such increase as is mentioned in section 64(2)(c) above were disregarded, subsection (1) above shall apply to the whole of that sum, notwithstanding that it exceeds £500, and for the purposes of subsection (2) above the whole of that sum shall be taken to be the sum which he might have nominated.

69Validity of payments

(1)A payment made by a registered society or branch under section 68 above shall be valid and effectual against any demand made upon the trustees or the society or branch by any other person, but the next of kin or personal representatives of the deceased member shall have a remedy for recovery of the money paid under that section against the person who has received that money.

(2)Where a society or branch has paid money to a nominee in ignorance of a marriage subsequent to the nomination, the receipt of the nominee shall be a valid discharge to the society or branch.

70Certificates of death

(1)Subject to paragraph 1 of Schedule 5 to this Act and paragraph 5 of Schedule 6 thereto, a registered society or branch shall not pay any sum of money upon the death of a member or other person whose death is, or ought to be, entered in any register of deaths, except upon the production—

(a)of a certificate of that death under the hand of the registrar of deaths or other person having care of the register of deaths in which that death is or ought to be entered; or

(b)of the grant of probate of the will of the member or other person or of letters of administration to his estate or of a certificate of confirmation to his estate.

(2)This section does not apply to deaths at sea, nor to a death by colliery explosion or other accident where the body cannot be found, nor to any death certified by a coroner or procurator fiscal to be the subject of a pending inquest or inquiry.

71Prohibition of insuring money to be paid on death of a child under ten

(1)Subject to the following provisions of this section, a registered society or branch shall not insure so as to render any sum payable under the insurance on the death of any person at any time before he or she attains the age of ten years, otherwise than by way of repayment of the whole or any part of the premiums paid.

(2)Subsection (1) above does not apply to a sum payable to another person who has an interest in the life of the person on whose death the sum is payable.

(3)Subsections (1) and (2) above apply to an unregistered society or branch thereof as they apply to a registered society or branch thereof.

(4)Subject to the provisions of any Order in Council under section 7 of the Industrial Assurance and Friendly Societies Act 1948 (which confers power to extend the application of this section and of certain provisions of that Act originally limited to persons resident in Great Britain), subsection (1) above applies only in the case of a person who, at the time of the proposal, is ordinarily resident in the United Kingdom or the Isle of Man.

(5)Any society (whether registered or not) or any branch, other than a collecting society or branch thereof, which insures in contravention of subsection (1) above shall be guilty of an offence and liable on summary conviction to a fine not exceeding £100 in the case of a registered society or branch and £50 in any other case.

(6)Any collecting society or branch thereof which insures in contravention of subsection (1) above shall be guilty of an offence under the Industrial Assurance Act 1923.

(7)This section in its application to collecting societies shall be construed as one with the Industrial Assurance Acts 1923 to 1968.

72Limitations on insurance of life of parent or grandparent

(1)In effecting an insurance for the purpose referred to in paragraph (2)(d) of Schedule 1 to this Act, a registered friendly society or branch thereof shall not insure to be paid to any person on the death of any one of his parents or grandparents any sum which, either taken alone or when added to any sum or sums for the time being insured to be paid to that person on that death under any other relevant insurance or insurances taken out by him, exceeds £30.

(2)Where an insurance has been effected for the purpose referred to in paragraph (2)(d) of Schedule 1 to this Act then, subject to subsection (3) below,—

(a)the society or branch shall not, by virtue of or in connection with that insurance, pay to any person any sum which exceeds £30 when taken alone; and

(b)the society or branch shall not, by virtue of or in connection with that insurance, pay to the person by whom that insurance was taken out any sum which exceeds £30 when added to any sum or sums paid to him, on the death on which money was thereby insured to be paid, by virtue of or in connection with any other relevant insurance taken out by him; and

(c)if any payment has been made on the death in question by virtue of or in connection with that insurance to the person by whom it was taken out and that payment has not been repaid, the society or branch shall not pay to him on that death, by virtue of or in connection with any other relevant insurance taken out by him, any sum which exceeds £30 when added to the sum so paid and not repaid, or when added to it and to any sum or sums paid to him on that death by virtue of or in connection with any other relevant insurance or insurances taken out by him.

(3)For the purposes of subsections (1) and (2) above there shall be excluded—

(a)any sum insured to be paid, or paid,—

(i)by way of bonus, other than a guaranteed bonus; or

(ii)by way of repayment of premiums ; or

(iii)under a free paid-up policy which was in force as such on 30th June 1948 or had been applied for or claimed before that date; and

(b)so much of any sum insured to be paid, or paid, on the death of any one of a person's parents or grandparents as represents any increase in a benefit payable by the society or branch or by an industrial assurance company under a friendly society or industrial assurance company contract, as those terms are defined in section 6 of the Decimal Currency Act 1969, resulting from the adoption of a scheme prescribed or approved in pursuance of subsection (3) of that section.

(4)In this section " relevant insurance " means an insurance effected (whether before or after the commencement of this Act) by a registered friendly society or branch or by an industrial assurance company in exercise of any power conferred by—

(a)section 3 of the Industrial Assurance Act 1923 (which has not been operative since 1949 in the case of insurances on lives of persons resident in the United Kingdom or the Isle of Man);

(b)section 1 of the Industrial Assurance and Friendly Societies Act 1929 (which after the commencement of this Act is confined to industrial assurance companies but is otherwise similar to paragraph 2 of Schedule 6 to this Act);

(c)section 2(1) of the Industrial Assurance and Friendly Societies Act 1948 (which after the commencement of this Act is confined to industrial assurance companies but is otherwise similar to paragraph (2)(d) of Schedule 1 to this Act);

(d)paragraph (2)(d) of Schedule 1 to this Act; or

(e)paragraph 2 of Schedule 6 to this Act.

(5)In this section "parent" includes a stepfather and a stepmother and references in this section to a payment on a person's death include references to a payment for his funeral expenses.

73Supplementary provisions as to insurances referred to in s. 72

(1)The provisions of Schedule 5 to this Act shall have effect with regard to the production of certificates of death in connection with the making of payments relevant for the purposes of section 72 above.

(2)Where under any relevant insurance effected by a registered society or branch money is for the time being insured to be paid to the person by whom the insurance was taken out on the death of a parent or grandparent of his, any assignment or charge made by him of or on all or any of the rights in respect of the insurance conferred on him by the policy, by section 24 of the Industrial Assurance Act 1923 (provisions as to forfeited policies), section 3 of the Industrial Assurance and Friendly Societies Act 1929 (which after the commencement of this Act is confined to industrial assurance companies but is otherwise similar to section 75 below) or section 75 below, and any agreement so made by him to assign or charge all or any of those rights, shall, except in the case of a charge or agreement to charge for the purpose only of securing sums paid for keeping on foot or restoring the insurance, be void; and on any bankruptcy of his or on the sequestration of his estate none of those rights shall pass to any trustee or other person acting on behalf of his creditors.

(3)Subsections (4) and (5) of section 72 above shall apply in relation to this section as they apply in relation to that section.

(4)Any registered society or branch, other than a collecting society or branch thereof, which fails to comply with the provisions of section 72 above shall be guilty of an offence under this section, and any collecting society or branch thereof which fails to comply with the said provisions shall be guilty of an offence under the Industrial Assurance Act 1923, unless (in either case) it is proved that, owing to any false representation on the part of the proposer, the society or branch did not know that the insurance was in contravention of that section.

(5)A society or branch which is guilty of an offence under this section shall be liable on summary conviction to a fine not exceeding £100.

(6)Section 72 above, this section and Schedule 5 to this Act in their application to collecting societies shall be construed as one with the Industrial Assurance Acts 1923 to 1968.

74Provisions with respect to certain insurances where person assured is resident outside United Kingdom and Isle of Man

The provisions of Schedule 6 to this Act shall have effect in relation to the insuring by registered friendly societies of money for funeral expenses, or of money to be paid on the duration of a life for a specified period, where the funeral expenses are those, or the life in question is that, of a person who at the time of the proposal is ordinarily resident outside the United Kingdom and the Isle of Man.

75Rights of owners of certain endowment policies

(1)Where under any policy to which this section applies not less than one year's premiums have been paid, the owner of the policy shall be entitled at any time within one year from the date on which the last premium was paid to surrender the policy and to claim either—

(a)a free paid-up policy in conformity with the rules contained in the Schedule to the Industrial Assurance and Friendly Societies Act 1929; or

(b)payment of a surrender value equal to 90% of the value of the sum or sums payable under such free paid-up policy, calculated in accordance with the last four rules contained in Schedule 4 to the Industrial Assurance Act 1923.

(2)If any registered friendly society fails to comply with any claim made under subsection (1) above, the society shall, without prejudice to any other liability to which it may be subject, be guilty, in the case of a collecting society, of an offence under the Industrial Assurance Act 1923 and, in the case of any other society, of an offence under this Act.

(3)This section applies to—

(a)any policy issued in pursuance of paragraph 2 of Schedule 6 to this Act;

(b)any policy issued, or deemed under paragraph 6 of Schedule 10 to this Act to have been issued, in accordance with section 1 of the Industrial Assurance and Friendly Societies Act 1929, being a policy in force at some time after 1923 ;

(c)any other endowment policy issued on the life of a child under ten years of age and in force at some time after 1923.

(4)No registered friendly society shall issue any such policy as is mentioned in paragraph (a) or (c) of subsection (3) above unless the rules of the society contain a rule which, in the opinion of the Chief Registrar, sufficiently sets forth the effect of the provisions of this section and of the Schedule mentioned in subsection (1)(a) above.

(5)Every premium receipt book issued by a collecting society in respect of a policy to which this section applies shall set out the provisions of this section and of the Schedule mentioned in subsection (1)(a) above, printed in distinctive type, or, if the Industrial Assurance Commissioner consents, a statement in lieu thereof which in the opinion of the Commissioner sufficiently sets forth the effect of those provisions.

(6)If any premium receipt book issued by a collecting society does not comply with the provisions of subsection (5) above the society shall be guilty of an offence under the Industrial Assurance Act 1923.

(7)In this section—

  • " endowment policy " means any such policy as is mentioned in subsection (3)(a) or (b) above or a policy insuring money to be paid on the duration for a specified period of the life of the member, either with or without provision for the payment of money in the event of the death of that person before the expiration of that period and either with or without provision for the payment of money before the expiration of that period and during the life of that person in the event of the marriage of that person or otherwise ;

  • " policy " includes any contract of assurance and the date of the making of any such contract shall be deemed to be the date of the issue of a policy.

(8)This section in its application to collecting societies shall be construed as one with the Industrial Assurance Acts 1923 to 1968.

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