Ahead of this week's Budget, where greater flexibilities for existing annuity holders are expected to be announced, online investment services provider Willis Owen is calling on the Chancellor to offer those pensioners a way to smooth the process by increasing the annual ISA allowance to £20,000. This would allow them to invest more cash into an ISA in one go.
Research conducted online for Willis Owen by leading research firm Opinium found that just over one in four people (27%) would like to see the next Government increase the annual ISA limit to £20,000 to help encourage people to save and invest.
According to Willis Owen, the Chancellor should seriously consider doing it now to offer people who may convert annuities the opportunity to save more of their cash tax-free.
Jason Chapman, Managing Director at Willis Owen, commented:
"People have told us that they would like to see the next Government introduce a higher annual ISA allowance, but with incoming pensions freedoms why doesn't the Chancellor announce it now? If the net effect of the changes is that more people find themselves withdrawing lump sums of cash from pension pots or existing annuities, then investing it in an ISA tax-free could be a desirable option.
"Providing a bigger ISA allowance could offer annuity converters a more seamless process if that is where they choose to put their cash. It would also allow them the potential of higher growth or income and flexible access over the medium term – unlike traditional teaser or higher rate bank accounts which have penalties for withdrawal.
"Increasing the ISA allowance would benefit more than those in or at retirement though. Millions of people value ISAs as a vital way to generate long-term growth – it's arguably the UK's most popular way to save. This would offer an even greater opportunity for people to save and invest tax-free."