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October 17, 2001


PIMA, the PEP and ISA Managers’ Association, believes that up to an additional 24,000 small shareholders may have lost over £70 million, through their PEPs and ISAs, as a result of Railtrack’s insolvency.

A survey across PIMA’s membership revealed that the Government’s actions might have affected thousands of individuals who held Railtrack shares in PEPs, ISAs or ISA unit trusts, through their managers’ nominee companies (and so will not have appeared on Railtrack’s shareholder register). Upwards of 4,000 single company PEP investors are believed to be Railtrack employees.

These additional 24,000 PEP and ISA shareholders will particularly suffer because while investing in PEPs & ISAs provides exemption from Capital Gains Tax (CGT), in the event that investors record losses, they cannot off-set these against CGT liabilities. Thus putting them in a much worse position than if they had held Railtrack shares directly.

Tony Vine-Lott, Director General of PIMA, commented:

“These people are not fat cat City investors: most are the ‘Sid’ small investors in UK government privatisation stocks. Many are employees of Railtrack – signalmen, drivers and engineers – using their wages and occasional bonuses to invest in their future. PIMA is concerned about the message this sends out to ordinary investors at a time when confidence in the financial services industry is tested.

“We call on the Government to review its current valuation of Railtrack shares and to take account of the long-term effect the Government’s action may have on the success of its own policy to develop a culture of long term saving in this country.

“The shock ISA investors will have experienced over Railtrack’s collapse will have long-term impact on the entire savings market and may well even affect the public’s appetite to take up Stakeholder pensions.”