ISAs replaced PEPs in 1999 and you can no longer open a PEP. However, you may still have a PEP investment, but your original objective for investing or attitude to risk may have changed, so now may be the time to review your existing PEP and consider whether you are really making the best of it.

Unsatisfactory performance

Fund managers change companies and it could be that the leading management company with which the PEP was originally invested is now nothing of the sort. In this situation, a PEP Transfer may be the best way to improve the future potential of your savings.

Changes to the PEP rules

From 6 April 2001, PEP investments were no longer restricted in the proportion of non-UK assets that they may invest in. So you may wish to review your investments to see if your investment objectives can be better met by increasing the proportion of non-UK assets you hold. Or you might like to hold a property fund instead being restricted just to stocks and shares

Key Questions Answered

What are the tax benefits of a PEP?

The tax benefits of a PEP are the same as those of an ISA. You do not have to declare your PEP on your tax return. Income Tax is not payable on any income from your PEP, including dividends, interest and bonuses.

Interest distributions from corporate bond funds and fixed interest securities are entitled to a tax credit of 20%.

All growth you make in your PEP is free of capital gains tax.

Can I transfer my PEP?

Yes, you can transfer your PEP to another PEP provider, without losing your tax benefits.

What factors should I consider before transferring a PEP?

Factors you should also take into consideration include:

• Exit charges or other costs associated with the transfer from the original PEP Manager
• Costs of setting up a new investment, and
• Potential for loss of income, or of growth, if the market rises while transfer is pending.