Transferring PEPs or ISAs

There are two main reasons why an investor might need to reconsider their current selection of funds.

1. Poor performance

Some "star" funds can turn in great figures for a year or so and then fade over the medium to long term until they are at the bottom of their peer group. One key factor in a fund.s performance is the actual fund manager. If they leave, it can have a major impact on the fund, particularly if they are replaced by someone of little or no recognizable experience.

2. Diversification

Many client portfolios have a large proportion held in one particular investment sector, usually in the UK. They may benefit from a transfer to reduce risk associated with having "all their eggs in one basket".

Instead, you may want to consolidate a wide selection of small sums of money, held with a variety of fund managers, into a few select funds to make it easier to keep track of your holdings. Your investment needs and appetite for risk will change over time. Your current PEP or ISA investment may no longer be appropriate.

PEP transfers

Investors who opened PEPs in the late 80s and 90s may like to change the account manager and move into funds or shares.

A transfer is simple and will not affect the tax-free status and there is no limit on the amount you transfer. If you transfer your PEP to a new account manager you will not be under any obligation to take out an ISA with them, and you do not have to invest your ISA with the same account manager as any of your current PEP accounts.

You can also make a partial transfer of your existing PEPs, provided that clear instructions are given indicating the amounts and the specific funds into which the transfers are to be made.

Single Company PEPs, which could only be invested in the shares of one company, can now be transferred to new account managers and invested in funds like General PEPs.

ISA transfers

The principles of transferring ISAs are similar to those of PEPs. Transfering previous years. accounts will not affect your current year.s allowance.

NB: You cannot transfer between a Maxi and a Mini ISA or vice versa. Investments in the various components can only be transferred to the same components with new account managers, so for example a Mini Cash ISA can only be transferred to another Mini Cash ISA - not a Mini Stocks and Shares ISA.

Costs involved

These will depend on the terms of your existing account manager, and the initial costs of the new provider to whom you are moving. These may include: exit charges, transfer penalties, plan closure fees or pro-rata annual management costs for leaving before the end of a half-year period.

You should check the terms and conditions of your current plan to see what, if any, charges apply. During transfer there may be a delay of up to 4 weeks between closing down your existing account and opening your new one. During this period you will not participate in any upward movements in the stock market. If you use a fund supermarket you should check with us to see if you can re-register your existing units first before completing the fund change once the new supermarket account is opened. We find this to be a more efficient way of changing funds and it reduces this out-of-the-market risk.

Making a transfer

You must complete a special PEP or ISA account transfer form (contact us for the forms).

These are usually in two parts.

One requires personal and investment details for your new account; the other is an authority asking your existing account manager to transfer the proceeds.

Simply return them to Allenbridge to obtain our special discounts. Your new account manager will arrange the transfer of the existing funds and co-ordinate the entire process.