Debate and scepticism in recent years about the personal pension as a retirement savings option has been an ill-informed ‘knee-jerk’ reaction to short-term turbulence in investment markets.
Taking a long-term view, putting your cash in the stock markets directly, or through a personal pension, is still by far the most efficient means of making an investment or saving for retirement, as recent data from Scottish Widows* can show.
By charting the performance of a long-term stock market investment made in 1945, Scottish Widows shows that returns over a 60-year term were an amazing 70 times greater than investing the same sum in a bank or building society account.
A sum of £100 invested in a building society account in 1945 would have been worth just £1,767 by 2006, according to Scottish Widows.
However, the same £100 invested in the UK stock markets, as measured by the Barclays Equity Index and including dividends reinvested, would have grown to £125,243 over the same time period.
Today, exposing your long-term savings to stock market rates of growth in a pension fund is even more efficient, due to the levels of tax relief currently available. Government tax relief boosts a £100 investment to £125 at the outset, achieving even greater returns on your retirement savings in the long term.
No other savings option offers what a pension currently offers: an unbeatable 20% growth in your savings on day one, and stock market rates of growth in the decades to come, until your retirement.
Why not take a moment now to make a pension enquiry, to calculate your retirement income using our pension planner, or find out more about other options for your stock market investments.
*Scottish Widows ‘UK Financial History 1945 – 2006′
