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Tories pledge to bring back simplicity for IPAs

The Conservatives are proposing to simplify IPAs, making them closer to the original idea of a lifelong investment plan to fund retirement, floated by Labour after their election victory.

Tories claim IPAs are currently based on pension schemes, meaning savers are hit with a double fee for the scheme and the IPA. By decoupling this link, the Tories say IPAs will be more attractive.

The move would be similar to Lifelong Individual Savings Accounts which the industry considered the Treasury was planning in 1998 and which eventually evolved into IPAs.

The Tory plan would allow people to determine how much they contribute in a year and not be dictated by pension contribution limits.

Also under consideration is allowing people to draw upon their savings in times of medical emergencies. This would be similar to an idea put forward by the private medical insurance industry for a medical Isa. The Tories admit that this plan has not been costed.

Shadow Chancellor Michael Portillo says: “A product that looks, tastes and smells like an Isa is very attractive. People respond to that. We are hoping to revive something about which there was a great deal of consensus when they were first invented.”

Threadneedle Investments communications director Ric-hard Eats says: “That sounds rather more along the lines of what we had understood the Treasury was originally proposing. The key to making these successful is to make them as simple as possible.”


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