Personal Equity Plans: Singles given a new lease of life
Sunday 01 February 1998
Normally, if you already own shares and want to put them into a PEP, you have to sell them and let a PEP manager buy them back. But with shares bought or received at a preferential rate through an employee share-option or profit-sharing scheme, this does not apply so long as you put the shares in a single company PEP within 90 days. Companies with these schemes often appoint a PEP manager to operate them for employees and charges are low.
Last year saw another group of people investing in single company PEPs - the millions who received windfall shares from demutualising building societies and insurance companies.
Many of them had never owned shares before, but now wanted to shelter the free shares in the tax-free haven of a PEP. Single company PEPs made a potentially attractive home for them, as in many cases the investors had no intention of buying any other shares.
Investing in just one company's shares is usually a high-risk strategy. Most investors will want to diversify their risk and invest in a fund where their money is spread across a wide portfolio of equities. But with the new individual savings accounts due to replace PEPs in April 1999, investors with spare cash may want to reconsider the merits of single company PEPs.
Ian Millward, editor of Chase de Vere's PEP Guide, points out that under proposals for the ISA there will be no distinction between single company and general PEP money. You will be able to put up to pounds 50,000 of PEP money into an ISA. So if you do not have this much invested in PEPs and want to get as much tax-free savings as possible into an ISA at the outset, investing in a single company PEP now could make sense. "This way you can build up your PEP savings. Once you have tipped these into an ISA next year, you can then transfer the single company PEP money into a collective investment," says Mr Millward.
As with all PEPs, you have to invest in single company PEPs through a PEP manager. They can be self-select, corporate or managed.
More than 200 public companies have set up corporate PEPs to encourage people to invest in their shares. The company appoints a PEP manager who administers the scheme for them. Charges are low, and in some cases there are no fees at all. If you know which company's shares you want to buy, this can be a cheap way of setting up a single company PEP. But these schemes can be inflexible as often you can only hold that company's shares in the PEP. Corporate single company PEPs are generally run by the stockbroking arms of building societies and banks.
If you would like some help in selecting a suitable company, you should opt for a managed single company PEP where the manager chooses a company for you. Managed PEPs are offered by a number of stockbrokers as well as companies such as Fidelity, Perpetual and Johnson Fry. Check charges as these can work out expensive.
Single company PEPs do have limited appeal inasmuch as most of us will want more diversification in our investments than a single trading company. But some managers have taken advantage of loopholes in the PEP rules to launch "single company" PEPs that offer lower risks. One example is HSBC's Protector PEP which invests in one company, HSBC UK Equity Plus, based in Dublin. This in turn invests in a whole range of top UK companies. The HSBC Protector PEP qualifies as both a general and a single company PEP, and will run for two years. During this time, investors receive any growth in the FT-SE 100 index up to 10 per cent a year and their capital is also protected. If at the end of the period the market has fallen, savers will still get back all their original money. The PEP is available until 5 March, and the minimum investment is pounds 1,000. For more details call 0800 289505.
q Chase de Vere Investments publishes details of all the PEP schemes on the market. PEP Guide costs pounds 12.95 and is available by calling 0800 526092.
01 April 2015 12:00 AM
Video: The Independent's Personal Finance Editor runs you through the key facts about Premium Bonds
27 March 2015 08:30 PM
27 March 2015 08:30 PM
20 March 2015 07:30 PM
How to make the most of Isas: You can save more money now, the returns are tax-free and the rules are flexible
20 March 2015 07:30 PM
13 March 2015 09:00 PM
13 March 2015 09:00 PM
10 March 2015 09:03 AM
The Financial Conduct Authority found non-compliance in all reviewed firms
11 March 2015 11:38 AM
Pension expert John Lawson talks on why improved longevity is something to plan for carefully
06 March 2015 08:30 PM
02 March 2015 10:50 AM
The DWP and the FCA have joined forces to investigate transaction charges in occupational pension schemes
04 March 2015 03:00 PM
The company was found to have unacceptably long call waiting times
27 February 2015 07:30 PM
27 February 2015 07:30 PM
27 February 2015 12:01 AM
The NHS is currently bearing a yearly burden of approximately £1.5bn treating cold-related illnesses every winter
- 1 Rape threats, death threats and a police investigation after video poking fun at an Islamic Party in Malaysia goes viral
- 2 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 3 Gamers confess the worst things they've done in The Sims
- 4 6-year-old writes ice cold Valentine's card to his stepmother
- 5 Syrian child photographed 'surrendering to camera because she thought it was a gun'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
Katie Hopkins reported to the police for race hatred by Labour MP Simon Danczuk after tweet about Pakistani men
iJobs Money & Business
£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...
£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...
Day In a Page
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000