If you are a taxpayer and you want to hold on to your shares for the long term - five years or more - it can make sound sense to put them into a general PEP.
You can then top this up when you have some spare cash - for example, the money which (in the case of the converting building societies) has been sitting in your savings account for more than a year to qualify for the windfall.
By putting your free shares into a PEP, all the earnings will be free of tax, and as the free shares do not count against the pounds 6,000-a-year per person PEP allowance, many fund managers have enticing offers for these new investors.
These include Fidelity and Save & Prosper, both of which will allow investors to park their windfall shares in their general PEP schemes free of charge until April 1999, with no further charge thereafter if they invest more funds in the plans.
In most cases, all it takes is a phone call, with most of the big-name fund managers more than happy to deal direct with the public, providing a telephone service for customers who want to deal directly. Most provide their service seven days a week at hours that suit the customer.
When Virgin Direct entered the market in March 1995 selling PEPs directly to the public, it was quickly followed by a number of other companies, including Direct Line, Marks & Spencer, Legal & General, Norwich Union and Guardian Direct.
Many of the plans offered are index-tracking funds, which are of interest to many first-time investors with windfall shares.
Instead of investing actively in shares that are selected individually by the fund managers, these funds invest solely in the companies which make up one of the stock exchange indices such as the FT-SE 100 ("the Footsie") - which covers Britain's 100 largest quoted companies - or the FT-SE All Share, which measures the share price performance of 900 leading companies. One or two track overseas indices.
Index tracking funds carry very low charges, and are sold mainly by providers who have low office overheads - they are based "out of town" rather than in London's Square Mile - employ few expensive fund managers and pay no commission to financial advisers or salesmen.
Generally, they carry no initial charges when buying nor any exit charges when selling. Annual management charges tend to be under 1 per cent, much less than with conventional unit trusts.
Since these tracker funds became widely available, they have always featured in the top 25 per cent of the performance tables for UK equity funds.
Since trackers went on sale, the stock market has been rising, so no one knows how they will feature in the performance tables when the market has a downturn. But as their promoters point out, a majority of actively managed funds failed to beat the markets the last time they ended the year lower than they began.
This highlights another important point about a PEP: because your savings are invested in the stock market, it must be held as a long-term investment, and should not be the home for all your emergency cash. The value of your plan will vary in line with market movements - and you don't want to be forced to sell at the wrong time.
Investors choosing to buy direct are not restricted to just index-tracking PEPs. Some groups have produced special packages to appeal to first-time investors such as the Fidelity with its MoneyBuilder, which invests in the group's UK Dividend Growth Fund and aims to outperform the FT-SE while levying charges comparable to a tracker fund.
More adventurous telephone investors can choose from more than 1,000 unit and investment trusts to put into their PEP. As a general rule, most plan managers will not offer any advice to callers.
The danger is that investors may be seduced by what seem like unbeatable offers advertised in newspapers' financial pages. These turn out to be far less attractive when studied more closely - after the sale has already taken place. Buying over the telephone means the responsibility for doing the homework necessary to make a worthwhile investment shifts to the buyer. Unless you are a sophisticated investor, it may pay to consult an independent financial adviser before filling in that coupon.
But increasing numbers of savers conclude that - with a little help from the financial pages - they can benefit from the low cost and convenience of telephone PEPs to invest for their long-term futurenReuse content