ISAs become cornerstone of saving
TISA has published a report into Individual Savings Accounts (ISAs) to provide an assessment of the market for what is now established as a core savings product for 42% of UK households.
At a time when there is still a pressing need to encourage higher levels of saving among a greater proportion of the population, TISA’s report – in association with Cimetric – aims to ensure that the debate is fully informed.
Subscription growth in the ten years since 1999 when ISAs replaced TESSAs and PEPs has been phenomenal with 15 million people investing £45billion in the 2009/10 tax year alone. Since 2006 subscription levels have grown by an average of 10% per year and by April 2010 total ISA funds amounted to £350billion, split in broadly equal proportions between Cash and Stocks & Shares ISAs.
Based on an analysis of data drawn from the HMRC, other public sources, Cimetric’s proprietary databases and consumer research the key findings of the report include:
- Lower income groups (annual earnings less than £30,000) accounted for 79% (about 8 million) of all Cash ISA subscribers and 59% of all Stocks & Shares ISAs
- 26% of all ISAs have balances over £15,000 and 31% hold less than £3,000
- 74% of those with ISAs of more than £15,000 are aged 45 and above
- The South East, London and North West account for 37% of the ISA market
- Equal numbers of men and women subscribe to ISAs, however men are more likely to buy a Stocks & Shares ISA
- Cash ISAs are four times more popular than Stocks & Shares ISAs
- Although investors may change provider the investments tend to stay within the ISA wrapper
- Cash ISAs tend to be used as a repository to maximise the return on emergency funds, whereas investing for retirement is a higher priority for Stocks & Shares investors.
TISA Director General Tony Vine-Lott says:
“A great part of the success of ISAs is due to the simple design and stable rules which have enabled ISAs to become highly valued by investors and providers alike. Such is the strength of the ISA brand that the government is planning a Junior ISA to replace Child Trust Funds and a ‘Social ISA’ to support the ‘Big Society’ initiatives. Providers are also being innovative with Corporate or Workplace ISAs being introduced.
“However the report does reveal a growing concern that the ISA brand is under threat and could be undermined by the potential inclusion of structured products in Cash ISAs.
“Nevertheless there are valid changes that could be implemented to make ISAs even more attractive. For example I would like to see the ability to transfer from a Stocks & Shares ISA to a Cash ISA, transfers on death – particularly between spouses, improvements to the tax advantage of Stocks & Shares ISAs and greater asset class parity with Self Invested Personal Pensions introduced.”
The report is published on 1 March 2011 and is available from www.cimetric.co.uk price £830 plus VAT for TISA members (£1450 plus VAT non members).
Ends
For further information, please contact:
Tony Vine-Lott, Director General, TISA – Tel: 01372 374728, Mobile: 07790 006108Email: tony.vine-lott@tisa.uk.com
Issued on behalf of TISA by Cauldron Consulting, contact Steve Radford – Tel: 020 3178 7238, Mobile: 07889 903786 Email: steve.radford@cauldron-consulting.com
Notes for Editors
The Tax Incentivised Savings Association (TISA)
TISA is the premier industry funded body in the UK retail savings and investment industry. By engaging with member firms, government, political parties, regulators and consumer groups TISA’s ultimate goal is always to further consumers’ best interests. It seeks to improve the range, features and quality of savings and investment schemes available whilst encouraging more people to save for their financial security and peace of mind.
Uniquely, TISA is able to articulate the opinions of the whole savings and investments marketplace through its membership comprising over 120 member firms involved in the supply or distribution of products. TISA’s remit extends across the broad spectrum of government sponsored savings and investment vehicles.