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Fund firms find they cannot unbundle Peps

Changes to the Pep transfer regulations are set to catch out several of the UK&#39s major fund managers which use the Rufus administration system.

The new rules, which came into operation last Friday, allow investors to unbundle individual years of their Pep investments rather than being restricted to transferring all the built-up fund held in their Pep at the same time.

But several fund managers, which use the Bank of New York&#39s Rufus admin platform, are still unable to unbundle Peps. Instead, investors will be left with the option of switching their whole Pep to another provider or liquidating their entire Pep.

Both options could be costly. Transfers usually incur charges while the tax-free shelter of Peps is lost once they are liquidated. Investors will only be able to reinvest tax-free up to their £7,000 annual Isa limit.

The biggest fund managers using the Rufus platform are Merrill Lynch Investment Managers, Invesco and Framlington. But Framlington says it has now developed an additional piece of software for the system which will allow it to unbundle Peps. Pressure is now mounting on the other fund managers to find a solution or risk losing business.

Invesco says the problem will be remedied later this year. Chief executive Mike Webb says: “The issue is a systems-driven one. The old Invesco Peps are still bundled and will be until the transfer of our administration platforms to Henley, which is due to take place in October.

“Although we are not legally obliged to unbundle, it is clearly commercially advantageous for us to do so.”


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