PEP Rules |
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you one of the many thousands of investors who, during the 12 or
so years that Personal Equity Plans (PEPs) were in existence, contributed
towards the many billions of pounds that were ploughed into them?
If so, it’s probably time that we had a PEP talk! |
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Time
to talk?
The rules that applied to PEPs were restrictive when it came to
constructing a balanced and diversified portfolio. A large proportion
of your investment in a PEP had to be held in either the UK or Europe.
As a result, it is estimated that today the majority of all monies
now held in PEPs are invested in UK funds. The fact that such a
high percentage of private capital is invested in the UK means that
these investments are totally at the mercy of the ups and downs
of one stock market.
Rule changes
If you find yourself in this position, please talk to us so that
we can discuss how you could rebalance your portfolio through a
PEP transfer. Put simply, this is the movement of your funds from
one PEP manager to another. Now, the much more flexible Individual
Savings Account (ISA) rules on where investor capital can be invested
largely also apply to PEP transfers. Therefore, if you want to transfer
your PEP out of a UK or European sector fund into one based in the
US, Japan or an emerging market, there is nothing to stop you doing
this.
The Treasury now also allows money you hold in single company PEPs
to be bundled together with funds held in your general PEPs by abolishing
the distinction between single company and general PEPs. This means
that you can move large sums from single to collective equity investments
while still keeping them within a PEP, thereby reducing your exposure
to risk.
Finally, let’s not forget about partial PEP transfers. If
your PEP is divided between a few funds – some good performers,
others not – it’s now possible to transfer out of the
under-performing funds to a new fund manager while retaining any
investments that have paid off.
For a PEP talk, please e-mail or contact
us for a completely independent review of your situation.
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Levels
and bases of, and reliefs from, tax are subject to change. Because
these investments may go down in value as well as up, you may
not get back the full amount invested. Exit penalties may apply.
Values of income and/or growth may fluctuate while any transfer
remains pending.
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