Under current rules, investors in the schemes are no longer permitted to buy offshore insurance companies' managed funds, unit linked funds, or investment trusts if the provider is registered outside the European Economic Area. According to a clarification of the term 'recognised stock exchange' issued on the 28th November, funds listed in jurisdictions such as Guernsey and Bermuda are not recognised.

However, the tax authority announced recently that no decision has yet been made on investors holding existing funds in non-recognised locations. Speaking to the Financial Times earlier this week, Shell Makwana, a spokesman for the Inland Revenue explained that: 'We are not insisting that these funds are surrendered until a decision has been made. We have not made a decision with regards to keeping tax relief.'

According to the Revenue department, the decision will be put on hold until the consultation paper on personal pensions and annuities, expected before Christmas, is released.