Quarter of consumers fear reduction in ISA allowance and tax relief cuts

A quarter (24%) of people fear a reduction in the ISA allowance, while others worry about cuts to pension tax relief and death benefits, according to a survey conducted by AJ Bell.

The survey revealed that 15.5% of respondents are concerned about the removal of pension death benefits, while 15% are worried about the removal of higher rate tax relief on pensions and 14.7% fear a reduction in the pension annual allowance.

Commenting, AJ Bell senior analyst Tom Selby said: “The fact almost a third of savers are worried the Government will cut pension tax relief and 24% fear a reduction in the ISA allowance perhaps suggests expectations of hand-outs are in short supply.

“Despite this there are some simple steps both policymakers and the industry can take to help struggling savers.”

Furthermore, AJ Bell found that almost 55% of savers would be encouraged to save more if the government offered greater incentives.

Selby added: “It’s probably no surprise to see most savers want the Government to give them more incentives to save, although whether this is realistic at a time when Brexit uncertainty continues to grip Westminster is another matter.

However, just under 30% of savers would be satisfied with simple investment solutions to meet certain needs, while 29% argued that fewer changes to the rules would encourage them to save more.

The research highlighted that almost two-thirds (60%) of savers struggle with picking their own investments, while 17% struggle to understand the tax implications and 11% bewildered by pension rules.

“The world of investments remains a black box of complexity for most people, perhaps unsurprising given the bewildering selection of funds available. For those struggling to decide what to do, low-cost, ready-made solutions could well provide a suitable solution, although careful monitoring remains essential,” Selby concluded.

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