Setting out the risk/return argument, Mr Norman Barry of Becketts explains that the Government subsidy translates into an investment return of 8.9 per cent per annum for any saver who completes the five-year term saving the same amount each month. Adding a deposit interest rate of, for example, 4 per cent per annum, gives a "no risk" return of 12.9 per cent per annum.

An equity investor needs an extra return to compensate for the extra risk. A risk premium of, for example, 3 per cent would mean the equity product would have to produce an annual return of about 16 per cent before charges. This would "most definitely be on the higher side of reasonable expectations", according to Mr Barry, who advises five-year savers that the deposit route is likely to be most appropriate for them. Equity-based products should suit savers who plan to continue their savings plan beyond the five- year term of the Government incentives, he advises.