Equity-based Special Savings Incentive Accounts (SSIAs) have moved ahead of deposit accounts as the best investment bet over the life of the Government-sponsored scheme.
New figures released by actuarial consultants Life Strategies show that SSIAs investing in the stock market were worth more than both fixed-rate and variable deposit accounts at the end of April.
The consultants also estimate that equity-based accounts will be more valuable than deposit SSIAs when they mature and can be drawn down.
Based on the maximum monthly contribution of €254, Life Strategies says that an equity-based SSIA opened just before the scheme closed in 2002 should be worth €20,793 after tax at maturity.
This is €205 more than the consultants had estimated a year ago, and compares to an estimate of €20,715 for a fixed-rate deposit account and €19,842 for a variable-rate deposit account opened at the same time with the same contributions.
The majority of the 1.1 million people who hold SSIAs took them out just before the entry phase for the scheme closed in April 2002.
A full-contribution equity-based account opened at the start of the scheme in May 2001 is expected to have fared considerably worse at maturity than one opened later.
Life Strategies estimates that a full-contribution equity account opened at the earliest stage will be worth €20,288 when it matures next year.
The projected €505 difference between early and late full-contribution equity accounts is based on the poor performance of stock markets at the start of the scheme.
A top contribution fixed-rate account opened at the start of the scheme in 2001 is again forecast to be worth €20,715, while a variable account with the same maturity date in 2006 is set to be worth €19,926.
The estimates are based on an assumed growth rate of 6 per cent per year before charges for equity accounts and a 4.25 per cent rate for fixed accounts.
The assumed future variable rate is 2 per cent.
Life Strategies points out, however, that not all SSIA providers offer the same rates on deposit accounts.
Also, a 6 per cent return on equity funds is not guaranteed.
The average monthly deposit when the scheme closed for entrants in 2002 was €158, or €197.50 when the Government top-up was included.
More recent estimates have pointed to an average monthly contribution of €175.
A further increase in average contributions is likely to occur before the end of the scheme, Life Strategies predicts.
