Brian Tora column

SO, FAREWELL then PEPs. It has been nice knowing you. From next Tuesday you are history. But you have made quite an impression in the 12 years you have been here.

The first PEPs, launched in 1987, allowed only pounds 2,400 to be invested in the stockmarket - and you could not buy unit or investment trusts. The allowance has been increased, with the result that this year you could have invested pounds 9,000, split between pounds 6,000 in a general PEP and pounds 3,000 in a single company PEP. If you had religiously used up each year's allowance, you would have quite a sizeable investment pile.

It is rumoured that there are a few PEP millionaires around, although I have yet to meet one. Certainly half-millionaires, if you take husbands and wives together into account, are not rare, given the way the market has advanced over the past decade. No wonder Labour decided to close the door.

Money has certainly been flowing into PEPs as people take advantage of this last opportunity. The marketing hype has been huge. This money has to be invested and, sure enough, shares are close to all-time highs. But then, so is Wall Street. In fact it is surprising that our market has not performed better, given the support.

To some extent we should not be surprised. While there are new investors attracted into the system through PEPs, much of the money that has been flowing in has simply been reallocated from other investment sources. PEPs were always most attractive to established investors. Firms like ours have been raising money from taxable portfolios to put into PEPs ever since they were introduced. They may have attracted tens of billions of pounds, but a lot was invested already.

The allowances for the ISA are less generous, but investment restrictions are not as great. This means that people putting money into this new vehicle could choose to invest it all outside the UK. And although you can put all of your ISA into the stockmarket, there is no obligation to do so - with mini-cash and life insurance ISAs available also. So do not expect ISAs to have anything like the impact that PEPs have had.

I am not convinced that PEPs have made that much of a difference to the market anyway, but we could soon be suffering from morning-after effects as we move into the new tax year. It may take a while for the dust to settle, but it would not surprise me if people took a more critical view of their investments once they know they have a full year to mitigate any tax complications that selling in April brings. We have become used to rising stock markets, PEP-fuelled or not PEP-fuelled. I have a feeling that we should expect rather more mundane conditions as we near the new millennium.

Incidentally, if you have not yet taken out your final PEP, there are a number of providers staying open all over the Easter break, just so they can relieve you of your money. I am told that at least one major investment house is prepared to take PEP applications as late as one minute to midnight on Easter Monday. That shows you how keen they are to make the most of this selling opportunity.

Brian Tora is head of Greig Middleton Asset Management