Britons saved more in stocks and shares Isas than personal pensions in the last tax year for the first time in nine years, according to the Office for National Statistics.
Figures from the ONS, published last week, show that £14.3bn was saved in personal pensions, excluding stakeholder, during the 2010/11 tax year while £15.8bn went into stocks and shares Isas. However, if stakeholder pensions are taken into account, pensions still come out on top with £18.03bn.
In 2009/10, £12.5bn was invested in stocks and shares Isas while £14.4bn was paid into personal pensions.
AJ Bell marketing director Billy Mackay says it is the first time that Isa saving has outstripped personal pension saving since 2001/02.
He says: “The figures are a clear endorsement of the success of Isas, which are simple and easily understood, and show how dangerous complexity can be for pension saving. The public likes simple products, a consistent set of rules and confidence that the product will not be the target of continuous Government attacks. If the Government wants pension saving to be successful, it must embrace those principles.”
Recent reports suggest that Chancellor George Osborne is considering reducing pension tax relief for higher- earners to help fund an increase in the income tax threshold to £10,000. But analysis from Standard Life indicates no single cut in pension tax relief would raise the £9.3bn needed to increase the threshold from £8,105 to £10,000.
Hargreaves Lansdown head of advice Danny Cox says: “There is no doubt that Isas have benefited from having a simple, straightforward set of rules while pensions have been subjected to constant tinkering from the Government. The decision to cut the annual allowance from £255,000 to £50,000 will also have had a significant impact on pension saving.”