Personal pensions: latest results
The state of the economy has hit returns on all types of personal pensions. It's not all doom and gloom however. Janet Walford OBE finds some good news despite the gloom
At present, it seems that very few people are saving anything except maybe in cash ISAs. Interest rates on ISAs at time of going to press were about 3% pa. Far better return can, in fact, be had with putting the equivalent money in a cash pension fund.
If the £3,600 maximum cash ISA limit were instead invested in a personal pension, the investment would be made up to £4,500 by HMRC with the addition of basic rate tax at 20%. Assuming that the pension fund earned the same rate as the ISA, that £4,500 investment would have grown to £4,658 at the end of one year, a total return of £1,035, equal to nearly 29%.
Of course, with a pension, savings cannot be accessed until retirement, unlike an ISA, and this growth can only be obtained each time a net contribution is paid in. But nervous investors might like to consider a cash fund, (bearing in mind our comments earlier about the nature of the underlying investments), with the option to switch to other investment sectors when the market is judged to be more favourable.
