ISAs in for the long haul
Chancellor Gordon Brown has stated that Individual Savings Accounts (ISAs) are now a permanent savings option for UK investors.
Brown explained that ISA saving is very popular and that over 16 million people now have money tied up in ISAs – double the number of savers who used PEPs and TESSAs up until 1999, when they were phased out. By April 2006, UK savers had stashed £111bn in cash ISAs and £70bn in stocks and shares ISAs.
However, he did concede that the current ISA regime is confusing for many consumers and he plans to get rid of the current distinction between maxi and mini ISAs.
He also wants to make ISA investment in stocks and shares accounts more popular, and will enable savers to ‘roll forward’ cash saved so far in ISAs into a new stocks and shares ISA without infringing this coming year’s contribution limit.
Looking further ahead, savers will also be able to put money saved in maturing Child Trust Funds into an ISA, although these are not due to come on stream before 2020, when the first funds mature.
To further bolster ISA investment all existing PEPs – which are still held by 3.5 million people – will become stocks and shares ISAs.
However, there were some criticisms of the proposals on ISA investment. Adrian Coles, director-general of the Building Societies Association, said: “It is a disappointment that the Chancellor has not increased the annual subscription for the cash ISA.
“The cash ISA has been a success story so far and raising the limits would have helped to build on this success.”