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.
Currently, if you want to save the full amount of your Isa allowance, at least half must be placed in a stocks and shares 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. Fiddling with the stocks and shares Isa limit is akin to re-arranging the deckchairs on the Titanic.”
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.”
Bestinvest managing director of business development and communications Jason Hollands says the move would not necessarily have encouraged new savings.
He says: “While such a measure would have undoubtedly been well received by cash savers, it is questionable whether it would actually have encouraged new savings as opposed to shifting existing balances around.”
However Informed Choice managing director Martin Bamford would have liked to see the mooted changes made.
He 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.”