Press release

Confusion reigns regarding increased ISA allowances for over-50s

Thursday 10 December 2009

  • Only 5% aware of increased limit on October 6th 2009
  • Saga is launching new Cash ISA on 6th October, paying up to 3.85% AER
  • Admin-fee free Stocks and Shares ISAs available from October 12th 2009

A study launched by Saga reveals that just 5%* of over 50s know what the new ISA limits being introduced on 6th October 2009 will be, demonstrating that the Government and the savings and investment industry need to do more to advise people of the increase.

ISA limits are being increased to £10,200 for the over 50s, but worryingly the research conducted by the Saga Populus Panel, the largest research panel of over 50s in the UK, shows that over half (54%) have no idea what the new limits will be. A further two fifths (41%) know the limit is increasing, but did not know by how much, meaning many may not take full advantage of the increase when it is introduced, and as a result miss out on the tax free benefits available. On a more positive note, the research did highlight that two fifths (39%) are keen to top up their ISAs following the change.

To coincide with the increase in ISA limits, Saga Personal Finance is introducing new initiatives to help savers and investors make the most of this allowance:

· Saga is launching a new two year fixed rate Cash ISA on 6th October, paying an attractive rate of 3.85% tax free / AER for balances equal to or over £30,000 and 3.50% tax free / AER for balances below £30,000. This account can be applied for via telephone or online, is managed by post and has a minimum investment of £1. With the average 2 year Cash ISA paying just 3.13% tax free/AER**, Saga has unveiled this new ISA that will help older savers maximise the return on their savings.

· From October 12th the Saga Share Dealing service*** is also removing administration fees from it’s Stocks and Shares ISA, making it one of the very few brokers offering completely admin-free ISAs without a minimum account valuation. Therefore investors can be confident that all of their money is working hard for them and making the most of the higher returns offered by Stocks and Shares ISAs.

· It is possible to transfer other ISA funds into the Saga 2 Year Fixed Rate ISA and the Saga Stocks and Shares ISA, providing people with the perfect opportunity to make the most of their tax free allowance, particularly if their current provider is not offering the additional top ups.

Andrew Goodsell, Chief Executive, Saga Group, commented: “ISAs are a vital savings vehicle, but clearly more needs to be done to ensure people make the most of the benefits available. We urge the over 50s to take a closer look at their savings and investments and to research the ISAs available to them, especially when the limits are increased on 6th October 2009.”

It appears that there is extensive confusion regarding current ISA limits, with less than two fifths (38%) knowing what the existing limits are, and women less aware of these than men (41% of men know vs 34% of women). People in their early 60s are significantly more clued-up on this than those in their early 50s (29% on 50-54s knew the limit vs 42% of those aged 60-64) highlighting perhaps that those nearer retirement take a keener interest in their savings. Only a third of people could correctly state what the limits are for both cash and shares within an ISA wrapper.

People are not using ISAs to the full, as only a third (38%) of over 50s with ISAs use all of their allowance each year. Those living in Northern Ireland were shown to be the most savvy with their savings, with almost half (44%) using up their allowance, in comparison to just a third (33%) in the East Midlands.

Andrew Goodsell concluded: “Having access to a larger tax free savings and investment allowance will help the over 50s plan their retirement income more efficiently and we do urge people to look out for competitive rates to ensure they invest their money wisely.”


Editors notes:

*The Saga Populus Panel is a monthly survey of over 50s opinion. The survey carried out in August 2009 received 10,308 responses.

** Source: moneyfacts comparison of 2 fixed rate ISAs, correct as at 14th September 2009

***The Saga share dealing service is provided by Barclays Stockbrokers Ltd (BSL)

About the Saga 2 Year Fixed Rate ISA

There is a minimum investment of £1 up to £3,600 in each tax year. From 6 October 2009, the annual Cash ISA limit will increase to £5,100 for anyone eligible to invest who was born on or before 5 April 1960.

Interest is calculated daily and paid annually on the anniversary of the first deposit and at the end of the term.

Access is permitted by post subject to 90 days loss of interest on the amount withdrawn.

Cash ISA investments from the current and previous tax years can be transferred to this Cash ISA.

About the Saga Stocks and Shares ISA

Unlike many other share dealing services, we do not charge management or inactivity

fees. There is also no ISA administration fee, making Saga Share Direct completely free of annual fees.

It is possible to ‘transfer-in’ other ISAs to the Saga 2 Year Fixed Rate ISA and Stocks and Shares ISA so all your ISAs are in one place.

The deposit taker for the Saga 2 Year Fixed Rate ISA is Birmingham Midshires, a division of Bank of Scotland plc, which is authorised for accepting deposits by the Financial Services Authority. It is entered on the FSA Register and its number is 169628. Registered office: The Mound, Edinburgh, EH1 1YZ (Registered in Scotland No. SC327000).

Saga Personal Finance Limited is registered in England and Wales (Company No: 3023493) and is a wholly owned subsidiary of Saga Group Limited. Registered Office: Enbrook Park, Sandgate, Folkestone, Kent, CT20 3SE.

Saga Share Direct is a registered trading name of Saga Personal Finance Limited, which is authorised and regulated by the Financial Services Authority. Saga Personal Finance Limited is registered in England and Wales (Company No: 3023493) and is a wholly owned subsidiary of Saga Group Limited. Registered Office: Enbrook Park, Sandgate, Folkestone, Kent, CT20 3SE.

The Saga Share Direct service, is operated for Saga Personal Finance by Barclays Stockbrokers Limited (BSL), which is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange and PLUS. Barclays Stockbrokers Limited is registered in England (Company No: 1986161). Registered Office: 1 Churchill Place, London E14 5HP.

Saga Fixed Rate ISAs and Stocks & Share ISAs are only available to UK residents aged 50 and over.

For more information please call the Saga Press Office on 01303 771529



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