The return delivered to self-invested personal pension (SIPP) and small self-administered schemes (SSAS) investors on cash accounts are still unacceptably low, warn Independent Financial Advisers (IFAs) in a survey run by Investec Private Bank.

The survey of specialist pensions advisers shows that 28 per cent estimate that their SIPP investors receive one per cent or less interest on cash deposits, and 59 per cent receive 2.5 per cent or less. Thirty-one per cent of these IFAs said their SSAS investors receive around one per cent or less in interest, and 55 per cent said 2.5 per cent or less is earned on cash deposits.

Twenty-five per cent of IFAs estimate that their clients have between £100,000 and £250,000 in their SIPPs in cash, and eight per cent said clients have between £250,000 and £500,000 deposited as cash. Five per cent said their clients have, on average, over £500,000 as cash in their pension fund.

"Only 39 per cent of pension IFAs we surveyed believe the rate of return on the cash element of a SIPP is acceptable with 37 per cent saying the same for SSAS rates. We would urge investors, particularly those with cash balances of £100,000 or more, to check the rate of return they are receiving on their cash and to move it to an account paying a competitive rate of interest," commented Lionel Ross, pensions and trust specialist at Investec Private Bank. "Many investors are receiving derisory returns on these deposits."

Of those who said their SIPP business had increased over the last year, 42 per cent attribute this rise to investors looking for greater control over their pension investments, and 19 per cent said it is down to clients looking for increased flexibility and access to a range of funds. Eight per cent said their clients were opting for SIPPs as they provide greater confidence in cash.

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