Over 50s seek fundamental change to cash ISA rules
Wednesday 14th March 2012
There is significant support for a change to ISA rules among over 50s, according to research by Saga.
Cash ISAs are universally popular among the over 50s, with 76% holding an account.
And Saga's survey of 10,862 people over 50 indicates that Cash ISAs are not just the preserve of the very wealthy.
Two-thirds of the least-wealthy social groups (DE) have a cash ISA account - rising to 78% for ABs. They are also more popular as you get older - with the numbers holding a Cash ISA increasing from 66% of a those aged 50-54 to 78% of those aged 70 -74.
The survey evidence suggests that older people have made the most of each year's tax free allowance, with almost one in ten (9%) saying they now have between £50,000- £100,000 of cash ISA savings, although typically they hold somewhere between £10,000 - £20,000.
More than two-fifths (44%) of respondents said that they were intending to use their maximum ISA allowance this year, with a further fifth (21%) unsure as to what they would do. This indicates that the over 50s could have a lot more to invest were they able to do so.
In fact when asked whether they thought ISA rules should be changed so they could hold the entire £10,680 ISA limit in cash if they wished to, there was huge support among the 10,000 people Saga surveyed. Two-thirds (65%) agreed that this was a good idea.
Ros Altmann, Director-General, Saga, said: "Typically as we get older we like to hold more of our investments in cash and live off the interest earned. The way the current ISA system works is unfair to older savers as they can only benefit from half the full ISA allowance each year. As savings rates have remained so low for so long, we call on the Government to change the ISA rules to help older savers receive more of their savings income tax free. These people have already been punished enough by the effect of Government policy on their savings income, and while interest rates remain so depressed and inflation rates remain high, it is only fair that older savers should have the flexibility to use the full annual ISA allowance for their cash savings if they need to."
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