The Investment Management Association has slammed the Institute for Public Policy Research's call for the scrapping of Isas, saying its conclusions are misguided and its proposals unlikely to lead to increased saving amongst low earners.
The IPPR says Isas have failed to penetrate those earning £10,000 to £15,600, but the IMA said Isas have continued the momentum started by Peps and Tessas in pushing flexible medium-term savings down the income spectrum.
IMA chief executive Richard Saunders says: "It is misguided to suggest that scrapping stocks and shares Isas will encourage those on lower incomes to save. It would simply remove a useful savings vehicle for middle to lower income earners who are attracted by its flexibility and tax exempt status.
"The IMA strongly believes the Government should maintain the tax benefits that have made these a historically successful savings product for medium term savers."