Advisers say they are unfazed by the Government’s decision not to bow to pressure to allow investors to put their full Isa allowance into cash.
In the Autumn Statement, the chancellor announced plans to raise the Isa limit from £11,280 to £11,520 in April 2013, bringing the cash limit up by £120 to £5,760.
The Government did not heed calls from banks and building societies however to enable people to put their full allowance into a cash Isa.
Pilot Financial Planning director Ian Thomas says increases in cash Isa limits are “unnecessary.”
He says: “Cash Isas are generally used to shelter deposits that savers already hold anyway, rather than encourage more saving. Significantly more will need to be done to increase the incentives for private long-term saving and investment if the savings gap is ever going to be closed.”
Chelsea Financial Services managing director Darius McDermott says the current split between investment and cash is sensible.
He says: “Investors need to be aware that cash Isa rates are generally poor at the moment and need monitoring as they often use a high rate to attract money and move it to a much lower rate after 12 months.”
However Informed Choice managing director Martin Bamford says: “I would have liked to have seen the ability for savers to invest the whole of their annual Isa allowance into cash savings, and to move freely between the two.
“Appetite for risk varies depending on economic and market conditions. There are times when investors want to be in cash for reasons like investment risk and timing of financial objectives.”