Personal Equity Plans (PEPs)
Costs
The costs of running PEPs vary enormously according to whether you hold shares, unit trusts or investment trusts. With shares held directly, there'll be a stockbroker commission every time a trade is made; managed funds, such as unit or investment trusts will have charged you an initial fee as well as an annual management charge. These are set as a percentage of the amount you invest. e.g. usually between 0% and 6% for an initial charge and up to 2% for an annual management charge.
You may still face initial charges if you are transferring funds in PEPs to a new plan manager. Most of them treat PEPs transfers as new business although some discount initial fees for transfers or make cut-price offers for investments over certain amounts.
Your existing PEPs manager may also make a charge for the withdrawal of funds. Such transfer penalties vary from 0% up to 5% in some cases for transfers within one year. There is also likely to be a small fee for leaving the PEPs scheme which is likely to be between £25 and £50 plus VAT.
Always remember, low charges are attractive, but cheapest is not always best. Just like star footballers, PEPs fund managers can be worth the money they are paid (but not always!). It's always as well to watch out for those PEPs managers who charge heavily but who fail to deliver the investment performance to compensate.
Moving abroad will not affect your investments in PEPs. The income and the capital gains will continue to be exempt from UK tax. However, PEPs are not transferable between people. On the death of an investor who holds PEPs, the tax efficient status of the PEPs cease. PEPs themselves cannot be transferred or passed on to a surviving spouse or any other beneficiary. However, the assets sheltered within the PEPs may, of course, be bequeathed in the normal way.
Transfers
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