11 December 2009
Tens of thousands of pension savers are losing money in cash
funds that are meant to shelter savings from stock market falls. A
combination of high charges and low interest rates means savers are
seeing their nest eggs slowly chipped away.
Last week, Standard Life warned 23,500 savers in its Pension
Managed Cash fund that they are losing money because the one per
cent annual charge is higher than the returns on the fund.
Although the losses are small, around 5p for every £100
invested, other savers incurred higher losses since the Bank of
England base rate fell 0.5 per cent in March.
According to investment analyst Trustnet, savers with Windsor
life have lost 2.7 per cent of the money held in their pension
deposit fund since the start of the year, while those in
Nationwide's Deposit fund run by Legal & General have lost one
per cent.
A spokesman for James Hay said: "These cash accounts are
designed to hold money for short periods of time in between
investments and are not designed to be high-yield cash savings
accounts or a form of investment in themselves. If customers want
to discuss options to get a greater return on their cash, we
recommend they get independent financial advice."
