PIMA BELIEVES THE PENSIONS BILL FAILS TO RECOGNISE HOW MILLIONS ARE FUNDING THEIR RETIREMENT
[b]Savers now using ISAs for their retirement savings[/b]
The Pep and Isa Managers’ Association today called on the Government to recognise millions of savers are using ISAs for their retirement savings – a fact the long-awaited Pensions Bill ignores.
As the Pensions Bill gets its 2nd reading on March 2 and as the number of final salary pensions continues to plummet, around £30bn a year continues to flow into ISAs – much of this to fund retirement. Against this background, the Government is pushing ahead with plans to make ISAs less attractive.
PIMA agrees with the Treasury Select Committee’s recent report which says the planned reduction in ISA limits from 2006 – will send the ‘wrong signals’ to savers.
PIMA calls upon the Government to promote increased retirement saving by:
[list][*] Reversing plans to reduce ISA saving from £7,000 to £5,000 from 2006
[*]reversing plans to reduce cash ISA saving from £3,000 to £1,000 from 2006 – cash savings form a major part of retirement planning
[*]Reversing plans to end the dividend tax credit on stocks and shares ISAs
[*]Recognising that ISAs are now an integral part of retirement savings and legislating to encourage their use[/list]
PIMA also called on the Chancellor to continue progress to ensure the Inland Revenue’s consultation on pensions tax simplification, which is set to reduce the number of pensions tax regimes from eight to one, maintains momentum in next month’s Budget.
Tony Vine-Lott, Director General of PIMA said: [i]“PIMA estimates that millions of savers are using ISAs to fund their retirement – the Pensions Bill does nothing to recognise this fact. The Government is hitting savers with a triple whammy – reducing the overall ISA limit, ending the dividend tax credit and reducing the level of cash savings which can be made. Cash funds form a vital part of retirement planning – as the number of people using their ISA to fund their retirement grows – the Government should be liberalising the regime rather than restricting it.” [/i]
[b]For more information and comment:[/b]
Tony Vine-Lott – PIMA 01372 374728 07790 006108
Iain Anderson – Cicero Consulting 020 7665 9532
07785 507045