More investors aged 50 and over put cash into ISAs after allowance is raised, reports show

News - Savings

Written by Ray Clancy

Tuesday, 02 February 2010 10:19

Putting money into ISAs is proving particularly popular with the over 50s since the government increased saving limits on accounts last year, figures show.

Chancellor Alistair Darling’s decision to raise ISA limits for this age group has been a ray of light in an otherwise grim outlook for tax benefit and wrappers, according to Adrian Lowcock, senior investment adviser for Bestinvest.

Since October 2009 investors over 50 have been able to save £10,200 each tax year and Lowcock claims that ‘the response has been huge from investors taking up the extra allowance’.

Research from Virgin Money has also shown a huge demand with the biggest increases in income funds, with contributions going up by 130% between October 5th 2009 and January 5th this year.

Older investors also more than doubled their lump sum contributions into share based ISAs, up 120% on the year during the same three month period.

Financial experts also point out that the increased ISA allowance from £7,200 to £10,200 a year is due to be extended to all savers from April 6. ‘With the ISA allowance of £10,200 to be extended to all savers in the new tax year, we would urge all investors to consider making the most of the increase in the tax efficient allowance,’ said Grant Bather, Virgin Money spokesperson.

These increased allowances have coincided with a strong stock market recovery. This has helped sustain a recovery in equity ISA sales. According to the Investment Management Association a record £23.6 billion was invested in investment funds during the first 11 months of 2009, more than 10 times the amount invested during the same period the year before.

With the end of the tax year approaching many who haven’t yet taken advantage make be looking at the ISA option. Many self employed and higher earners will also be looking to make lump sum payments into their SIPPs (self-invested personal pension) plans.

These do-it-yourself pension plans allow savers to put any investment fund into their pension, rather than relying on an insurance company to manage your money.