Government must boost Isa limits further to encourage saving culture

The managing director of investment adviser and broker Willis Owen said Isas were “simple and straightforward”, while pensions were in a “state of flux”, resulting in consumer confusion and the potential reluctance to save long term.

He said: “It’s time government recognised that Isas are increasingly being used as a more flexible alternative to the traditional pension.

“Yet from 1 July this year the Isa allowance will be £15,000, while the tax-free allowance for pensions in 2014/15 is £40,000.”

His comments followed confirmation in the Queen’s speech last week that the government’s pension reforms allow for “innovation in the private pensions market to give greater control to employees, extend the Isa and premium bond schemes and abolish the savers’ 10 pence tax rate”.

Andy Zanelli, head of retirement planning at Axa Wealth, said the focus on long-term savings provided an opportunity for advisers, adding: “Increased flexibility and greater access can only be achieved through proper financial planning, access to the right products and a simpler investment process.”

Adviser view

Chris Williams, former chief executive of Ashcourt Rowan Financial Planning, chief executive of WealthHorizon and board director at the Institute of Financial Planning, said: “The message is clear to the people of the UK: they are being encouraged to control their own financial future, with obstacles being removed and incentives being provided to those that rise to the challenge.”