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UK Pep Transfers


PEP up your investments - New PEP rules explained

From 6 April 2001, the qualifying rules for PEP investments align with those for ISAs. Importantly, this relaxes previous restrictions on fund selection based on geographic sectors.

The distinction between single company and general PEPs will be removed.

Existing single company and general PEPs will be treated simply as PEPs: their former classification will be irrelevant. This means that investors can merge single company and general PEPs held with the same provider if they wish, but are not obliged to do so.

Investments qualifying for inclusion in a PEP will follow the ISA rules, but in addition to this, investments that were PEP-qualifying under the old PEP rules continue to be allowed.

This is an important distinction as it allows continuing investment in, for example, shares and securities in investment trusts which have 'eligible rental income'. These are not allowed under the ISA rules.

In keeping with the relaxation of geographic investment restrictions, the distinction between qualifying and non-qualifying investments will be eliminated

The 25% rule - the proportion of a PEP that could be switched from qualifying to non-qualifying investments - will be removed.

The 42-day rule for single company PEPs will disappear

This required the proceeds from the sale of investments held in a single company PEP to be re-invested within 42 days of the date of receipt.

Partial transfers will be permitted

Previously PEPs were required to be transferred in their entirety. The new rules allow for a cash portion or percentage of fund value to be transferred, as with ISA transfers.

So what does all this good news actually mean ?

Well, the majority of PEP accounts are heavily biased towards the UK because of the previous PEP rules, with some having exposure to European markets. The PEP rule changes will enable PEPs to be more globally based and diversified; reducing the risk profile and enabling exposure to new economies and markets.

So you can now transfer your PEP to a new fund manager and take advantage of the rule changes whilst still benefiting from our nil initial commission discounts.