All the investment-type Special Saving Incentive Scheme plans surveyed, with the exception of the Aberdeen Asset Managers plan, are life assurance savings plans, which are designed for much longer-term investment than the five-year Special Saving Incentive Account (SSIA) term, according to Mr Norman Barry of Becketts Employee Benefits and Personal Financial Consultants.

Life companies defend five-year charges saying their plans are really designed for 10-yearplus savings and the SSIAs should therefore only be seen as a "booster" to encourage people to enter long-term savings arrangements, said Mr Barry.

Over a period of 10 years or longer, the average reduction in yield (RIY) for such plans will tend to fall to 2 per cent per annum.

However, Mr Barry described this approach as "wishful thinking" on the part of life companies because of the high lapse rates - the proportion of savers who stop their plans each year.

"Traditional lapse rates indicate that only about half of savers would save for the full five-year term and less than one-quarter would save for the full 10 years," he said.

Some institutions have clearly stated that unless a saver is willing to commit for at least seven to 10 years, they should not consider an investment SSIA, Mr Barry pointed out.

Savers who are uncertain if they can save for a target term of about 10 years should opt for plans with four-star value-for-money ratings to get the best possible value over the short term, Mr Barry said.

for Some plans that pay commissions to intermediaries appear twice in Table 1, page 1. The first entry is for the "noncommission" version of the plan and the second is the standard commission version.

The impact on RIYs, depending on the plan chosen, is substantial (Table 3).

The difference amounts to the "price" the saver is paying for the advice of the intermediary, Mr Barry said.

Savers should consider the alternative of paying a fee for advice and getting a noncommission contract, he said.

But savers should be aware that going direct to the relevant institution will usually result in getting the standard commission contract because life companies only offer the noncommission plans through intermediaries, he warned.

The information contained in mandatory disclosure notices from financial institutions may not be as useful as it should be to savers, according to Mr Barry.

All life assurance SSIAs must legally provide a disclosure notice to the saver, usually on a generic basis at the point of sale and on a client-specific basis at the cooling-off stage.

The Table of Projected Benefits and Charges in this disclosure notice will, underneath the table, show a single RIY figure. For SSIAs, the figure shown can be misleading as it will usually relate to the maximum savings term possible in the plan, sometimes 20 years.

The RIY over five years will usually be much higher but will not be shown on the disclosure notice.