Easy cash and hard choices

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Tomorrow, the Alliance & Leicester kicks off the long-awaited windfall-payout season from a range of building societies and insurers. The 2.5 million A&L savers and borrowers set to become at least pounds 1,000 richer might seem to have little to complain about.

If they have chosen to sell their shares straight away, the A&L has said it will do this at no cost, and sellers should be paid by the end of the month.

Those who keep their shares are likely to do even better. Big City investors chasing the share price up, the housing market's continuing recovery, the possibility of a special dividend, talk of a takeover bid, even - all this should help the performance of the shares. Those who put their windfall in PEPs - so making dividends and profits tax-free - stand to do even better, in theory at least.

It is the difference in deals the A&L is offering for these scenarios and what the deals may persuade shareholders to do that give me cause for concern. A&L has, in effect, encouraged people to cash in, and so probably miss out, while offering unremarkable-looking PEP deals for customers sticking with its shares. This is not in most people's interest. Nor, arguably, in the A&L's. If anything, the A&L might be expected to discourage sellers and encourage long-term holders, which could be done through a decent PEP deal.

But instead of offering a free single-company PEP - which could have proved popular - the A&L is offering to hold the shares in a not very cheap PEP where you are free to choose your investments or to swap your shares for an investment in a fairly unproven fund.

The result is that people who want to put their shares in PEPs are left to trawl through what can be an extremely confusing market. There is barely a PEP company in the land that isn't laying out its stall to attract the windfall-holders, but each has slightly different charges and conditions to get to grips with and it is not always easy to compare like with like.

The financial industry sees the A&L handout as a test run for what people due windfalls will do with them. I trust the Halifax et al will think things through a little more carefully for their customers.

WOULD you rather be a Swel, a Pearl, or just a plain old pensioner? Norwich Union has been rooting around for an aspirational name for pensioners in the hope of getting us to think positively about saving for retirement - ie, to make it easier to sell us more pensions. To translate: Swels are Seniors With Energetic Lifestyles; and Pearls are People Enjoying Active Retired Life. Let's hope Norwich Union's next move is a cheap and easy to understand pension, and an announcement that it has completely sorted out its share of the pensions mis-selling scandal.

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