Savers concerned ISA and pension allowances will be cut
8 January 2019
Nearly a quarter of consumers are concerned the Government will look to reduce the ISA allowance, findings from AJ Bell have shown.
According to a survey of 700 DIY investors, 24% are worried that lowering the ISA allowance would affect them, while 15.5% expressed concern about the removal of pension death benefits.
Asked whether they are worried about tax changes affecting their savings, a further 15% said they were concerned about the loss of higher rate tax relief on pensions, while 14.7% said a reduction in the pension annual allowance was a potential worry for them.
The survey also revealed a desire for the government to offer greater support to investors, with over half (53.4%) saying greater incentives from the government would encourage them to save more. Nearly a third (29.6%) called for simple investment solutions to meet certain needs, while 28.8% said fewer changes to the rules would encourage them to put more money into savings.
Tom Selby, senior analyst at AJ Bell, said: “It’s probably no surprise to see most savers want the government to give them more incentives to save, although whether this is realistic at a time when Brexit uncertainty continues to grip Westminster is another matter.
“The fact almost a third of savers are worried the government will cut pension tax relief and 24% fear a reduction in the ISA allowance perhaps suggests expectations of a hand-out are in short supply.”
Those surveyed admitted that choosing investments was one of the most difficult parts of managing their investments (60.7%), while 17.1% cited tax implications as the most complicated part of investing. A further 10.8% said understanding pension rules posed the greatest complication.
Selby said that given the high “demand for simplicity” both in the products and the rules that govern them, regulators and ministers should take note.
“The world of investments remains a black box of complexity for most people, perhaps unsurprising given the bewildering selection of funds available. For those struggling to decide what to do, low-cost, read-made solutions could well provide a suitable solution, although careful monitoring remains essential,” he added.
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