Money: A cheap and cheerful plan

Under the spotlight/ "GIRL POWER" PEP
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Indy Lifestyle Online
The product: Family Assurance's "Girl Power" PEP.

The deal: Even those on low incomes can take advantage of tax-free investment growth by saving in a personal equity plan. Savers need only put away as little as pounds 10 a month.

Plus points: All taxpayers help to finance PEP tax reliefs worth pounds 800m a year. Among the top-earning 10 per cent of the population, more than one-quarter take up PEPs. Yet among the lowest-earning tenth of the population, only 1 per cent do. PEPs are acting as a subsidy from all taxpayers to the better-off ones who can afford to save.

Family is making PEPs accessible to 9 million investors who can save just pounds 10 a month. Charges are low, shaving off just 2.4 per cent a year from investment growth. The slightly cheesy title, Girl Power PEP, is because savers can stop and start without penalty, meaning they are not penalised for a career break.

Drawbacks and risks: The minimum monthly payment is the lowest around. Charges, however, are not the lowest available.

Charges do not matter if Family's investment vehicle, the Family Balanced Unit Trust, grows by enough. If you believe Family can make your money grow as fast as top-performing investment managers, such as Perpetual, where the minimum saving is pounds 20 a month, buy this. But if Perpetual beats Family's investment record it may well be worth paying the higher charges. Family claims it has stayed in the top quartile of fund managers over one, two and three years. James Bruce, of Colchester-based Corporate and Personal Planning, disputes this, ranking it in the third quartile of fund managers over one and two years.

Verdict: Should be popular, though the Spice Girls probably won't bother.

Marks out of 10: Four.

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