Pensions have 'stability' benefit

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The long-term and inaccessible nature of pension savings is a key "benefit" of this form of investment, a spokesperson for The Pensions Advisory Service (TPAS) has said.

Des Hamilton, technical director of TPAS, argued that despite the many criticisms made of pensions in recent years, they have a key advantage over investing one's money directly.

He said: "If we have continuing stock market crashes a lot of people will be nervous. If you're close to retirement [and] suddenly [the market] falls away, you don't have the ability to wait for it to recover."

The key to saving for retirement is to start early and allow the benefits to build up by the compound interest principle. Gains from other kinds of investment may be greater in the short-term, but the risks are much higher, he suggested.

"Certainly there are safeties built into the system, in a sense, in that if you put money into a pension scheme it's locked away until you retire," Mr Hamilton continued.

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