Schroders slashes PEP costs

SCHRODERS has become the latest unit trust company to slash the front- end charges on its personal equity plan.

From the beginning of the new tax year on 6 April the initial charge on its PEP will be cut from 5.25 to 3 per cent.

The new fund will not carry an exit charge and the annual management charge will remain at 1-1.5 per cent.

Schroders joins M&G, Gartmore, Fidelity and Murray Johnstone in offering low front-end charges on PEPs.

However, M&G, Gartmore and Fidelity carry exit charges, the size depending on the length of time the investor has the PEP. In M&G's case, it starts at 4.5 per cent in the first year and drops to nil in the fifth.

Clive Boothman, managing director of Schroder Unit Trusts, said that, on average, investors kept unit trusts for between five and seven years.

PEP investors usually send off for three brochures, then look at the pricing. 'Charges in PEPs are reasonably critical,' he said.