Around 20 per cent of Sipp and SSAS investors are getting the Bank of England bank rate of 0.5 per cent or less on their investments, according to research from Investec Bank.
The survey, which polled 100 pension IFAs, found clients typically receive an average return of 1.33 per cent on cash deposits in a Sipp or SSAS product.
Seventy-one per cent of pension-focused IFAs admit their clients’ rate of return on cash deposits is “unacceptably low”.
Investec Bank pensions and trust specialist Lionel Ross says with big amounts sitting in “derisory” accounts, savers could take a significant hit on their final pension pot.
He says: “Despite having an average of 12.5 per cent of their total assets in cash, many savers are settling for interest rates that are unacceptably low.”
Research from Defaqto last year showed half of pension administrators had seen an increase in the proportion of cash allocated to clients’ Sipps over the 12 months to September, 2009. Nearly a quarter said they had seen a rise of up to 25 per cent.