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Bring on the savings revolution

Bring on the savings revolution

Category: Savings

Updated: 14/06/2010
First Published: 14/06/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
A think-tank has unveiled a wide range of new measures which it believes would help encourage Britons to save more money.

A radical simplification of the current system is needed, the Centre for Policy Studies has said, as the existing framework puts people off saving for their futures.

Key to the recommendations is more closely aligning ISAs and pensions, with an overall contribution limit of £45,000, while access to pension pots before retirement would also be allowed.

"Such a radical simplification is a prerequisite to encouraging more people to save more," said the body.

Getting youngsters to think about saving has long been called for and these new recommendations would see the introduction of a mini-ISA for under-16s, with an annual limit of £1,200.

People would be permitted to draw down a quarter of their pension savings before retirement, while any savings that are unused should be passed down to other family members, with monies exempt from inheritance tax.

The introduction of such a measure should encourage a wealth cascade down the generations and reinforce the personal ownership of pension savings, the Centre for Policy Studies added.

Partners would also be allowed to fund each others pension pots and receive tax relief on contributions, regardless of their own earning circumstances.

David Nish, chief executive officer of Standard Life, said: "The savings industry needs to help create a long term consensus amongst politicians about how to close the savings gap.

"Greater certainty and simplicity of tax incentives are a key part in achieving this."

Amongst the most popular savings methods at present are ISAs, which come with the added benefit of being tax-free.

Top rates for would-be savers include 2.70% from Birmingham Midshires, and 2.75% which can be gleaned from ISA offerings from both Santander and Nationwide BS.

Find the best savings rates for you - Compare savings accounts

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