Fifty-five per cent of pension administrators have seen an increase in cash allocation to their clients' self-invested personal pensions (SIPPs), says Investec Private Bank.

Research by the bank shows that over the last year, 23 per cent of administrators have seen an increase in cash allocations of up to 25 per cent amongst their clients, and a further 13 per cent had witnessed increases of between 26 per cent and 50 per cent.

The research also looked at the amount of cash in a client's SIPP, and found that over a quarter (29 per cent) of pension administrators believed their clients have less than £100,000 in the cash section of their SIPP, 13 per cent have between £100,000 and £250,000, and around three per cent have between £500,001 and £1million in cash.

However, 29 per cent of those surveyed said their clients received on average less than one per cent on the cash element of their SIPPs, and only 13 per cent said their clients' money earns over two per cent in interest.

"There are significant differences in the rate of interest paid on cash held in a SIPP account and the rate on most accounts will have changed significantly in the past 18 months. It's crucial, therefore, that those responsible for administrating them check that these accounts are paying a competitive rate," commented Lionel Ross, Investec Private Bank.

David Salmon, from Whiting and Partners Wealth Management, added: "It is completely understandable that schemes would wish to adopt a more defensive stance during periods of volatility and uncertainty although this does not mean that they have to accept almost non-existent rates on their cash deposits. A little effort can often achieve significant improvements."

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