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Concern over ISA confusion

Concern over ISA confusion

Category: Savings

Updated: 22/09/2009
First Published: 22/09/2009

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 It is now over 6 months old so the content may be out of date.

There appears to be confusion over the introduction of the new ISA limits, with only 5% of over 50s aware of what the new contribution limits will be.

From 6 October, the maximum contribution into an ISA will increase to £10,200 for those born on or before 5 April 1960, up from its present level of £7,200. The annual cash ISA limit will rise from £3,600 to £5,100 at the same time.

However, while research from Saga found 39% of over 50s would be keen to top up their savings following the change, knowledge of exactly what additions they will be allowed to make appears thin on the ground.

More than half (54%) of those surveyed admitted to not knowing what the new limits will be, while a further two fifths (41%) were aware that the limit is increasing, but not by how much.

As a result, it is feared that many will not take full advantage of the increase when it is introduced, missing out on the tax free benefits available.

Speaking to Moneyfacts.co.uk, Karen Brenchley, director of products at Saga Personal Finance, said the increase in allowances was a welcome signal that the Government recognised the over 50s had been hit hardest by the Bank of England's interest rates cuts.

"40% of Saga's savings customers rely on savings to generate an income. Coupled with this, it has been reported that inflation is running at a higher level for the over 50s, so the cost of living is rising at a higher pace than the returns they are seeing from their savings and investments. It is crucial that the over 50s maximise their tax free savings and their ISA allowance."

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