It won't be £61. Basic rate tax is recredited via the provider, with higher rate tax via self assessment, so more like £140 tops. Though the extra £20 could be from the employer contributions?
Though to get £100 into your savings account, you will pay tax and NI on your earnings, though that's not £160 either.
ISAs and pensions can carry very much the same risk. The associated risks should have been explained by the advisor really. Both can be invested in a variety of asset classes, in accordance to your appetite for risk. Usually a mixture of shares and bonds. As most people will have a significant time until retirement, using a volatile vehicle is desirable as regardless of ups and downs, the net position should be decent growth.
Using cash or deposits carries it's own risk too. Inflation has pretty much continually outstripped returns on cash. (I have data going back to 1950). So over the long term, you'd have to save a hell of a lot more for retirement. Whereas, as an example, the stock market has grown 442% over the last 25 years, including 2.5 recessions/crashes.
Shares are a gamble, but any decent pension provider will be investing in blue chip companies to reduce provider failure risk. This should be further mitigated by having about 200 shares/bonds within a fund.
The biggest issue (a downside for some, not for me, I'm rubbish at saving) is that once you put money into a pension, you cannot get it any earlier than 55 and how you get the money is very prescribed.
With interest rates at a very low level, a cash ISA is a token gesture. saving 20% on a 2-4% interest return isn't really going to set the thing on fire. As inflation is set to hit 5% this year, your money's value is actually decreasing unless you look to garner better performance. ie if a loaf of bread costs £1 today, next year it'll be £1.05. So unless your £1 has been getting a 5% return, next year you will have to find more money for the same loaf of bread.
There's no real percentage for loss. statistically (this is a dumb statistic, but backed up) the probability of actually losing money on a long term stocks and shares investment, reduces to near 0% over a 10+ year period. Stocks and shares are a gamble, but it's a risk/reward relationship. It really is probably your best chance at getting a reasonable income in retirement.
You really should be speaking with the advisor mate, rather than getting an armchair verdict (albeit there are FAs on here, me included).
post edited by Rosc0PColtrane - 2011/04/05 07:06:52