Is Tessa dead?

By THIS IS MONEY
Updated:

 

I have an M&G PEP worth £15,000 that matures in August. I wanted to put all of this into a Tessa, but am told that Tessas have finished and that I can only put £7,000 into an Isa. Is this true? Can I not keep my £15,000 in a tax-exempt account? SJ, Northampton

Ben Willis at Chartwell Investment says: The last date for investment into a Tessa was 5 April, 1999. You can invest a maximum of £7,000 into an Isa. The good news is that you can keep your £15,000 as a Pep. Although, your M&G PEP is maturing soon you will receive notification from M&G of the options open to you, these will be:

1. Encash the PEP and take the proceeds - naturally you do not want to do this as you want to keep it in a beneficial tax wrapper.

2. Transfer the maturing PEP into another of M&G fund(s) and retain its PEP status - usually this will be no charges incurred in doing this

3. Transfer the maturing PEP into another fund provider's fund(s) and retain its PEP status - you will incur charges from the fund you are transferring into.

By exercising options 2 or 3, you are still retaining the tax benefits of your PEP, all you are doing is changing the underlying investment fund.

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