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‘Merge Isa and pension worlds’

A thinktank is pressing for the Isa to play a bigger role in the pension accumulation process.

Centre for Policy Studies research fellow Michael Johnson said the pension industry should be looking to use the success of the Isa brand to encourage younger people to save for their retirement.

He said by including Isas into the auto-enrolment legislation, younger people and their employers would be encouraged to save. He said: “We need to merge the Isa and pension worlds. Isas are popular, so why deny it? To make them part of pension legislation needs a big leap of faith but we need to encourage people to get the savings habit.”

Johnson suggested the Government could combine contribution limits for Isas and pensions, incorporate retrospective pension tax relief for those who move assets from an Isa to a pension and even allow employer incentives for contributions to younger employees’ Isas.

He said: “Pensions do not make sense to an increasing amount of the population, particularly the under-35s. The word pension simply does not resonate with how the under-35s live their lives today.”

Scottish Widows senior financial planning manager Steve Meredith agreed that simpler and more flexible products need to be incorporated into pensions.

Annuity Exchange director Stuart Bayliss said incorporating Isas into pensions could help younger people save. He said: “We need a different attitude around different saving incentives and you then have to build incentives around the community you are addressing.”


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The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this document is deemed to be impartial research. We do not undertake to advise you of any change to our views.


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