SSIA investors lose out in stocks plunge

More than a quarter of a million investors are likely to have lost money on the Government-sponsored Special Savings Incentive Scheme, industry figures show. Almost 270,000 people chose to open an equity-based SSIA before the scheme closed at the end of April, accounting for slightly more than a quarter of all savers who took advantage of the Government offer.

Massive declines in the global stock markets over recent months have meant that these equity-based SSIAs have in general diminished in value, with some losses sufficiently dramatic to eliminate the Government contribution.

The losses incurred by SSIA holders will vary according to the institution managing the account, but some have estimated falls in excess of 25 per cent.

In a more benign instance, an individual who began investing €254 - the maximum permitted - in an equity-based SSIA at the start of July this year has already seen the value of his fund fall by 7.5 per cent, even when the Government's contribution of €1 for every €4 saved is considered.

Another example shows that organised savers who established their accounts soon after the scheme was launched in 2001 are likely to be even worse off. In this case, another maximum contributor to an equity-based SSIA has seen a fund of €4,762.50, including Government contribution, fall in value to €4,133.21. This represents a loss of 13 per cent.

SSIA-holders are free at any time to switch their account out of equities and into cash (or vice versa), but one expert has cautioned against making such a jump at the moment, despite the falls in value. "The damage is done at this point," said Mr John McGovern of Becketts Employee Benefit Consultants.