Research confirms ISA success

Economic Secretary to the Treasury Kitty Ussher MP has published two reports that highlight the success of Individual Savings Accounts (ISAs) in encouraging people to save.

ISAs are a straightforward, tax-free savings product available to all adults.

The two reports - Individual Attitudes to Saving: Effect of ISAs on People's Saving Behaviour Research into Attitudes and Motivations for Saving in ISAs; and Saving in ISA found that the tax incentives offered through ISAs to encourage people to save have been successful, with one third of people now holding an ISA account.

The reports find that of ISA holders questioned:

one in three had been encouraged to save by the existence of tax-free ISAs and around one quarter cited these tax incentives as the principle reason for saving

40% of ISA holders had saved £8,000 or more in their ISA account.

Kitty Ussher said: "This research helps to confirm the success of ISAs in encouraging people to save, enabling them to build up a financial asset.

"Next year we will be introducing reforms to build on that success.

We will make ISAs simpler to use, more flexible, and more generous with a higher investment limit. We hope that these changes encourage even more people to use ISAs to save."

The Government recognises the importance of savings in providing people with financial independence throughout their lives, security, and comfort in retirement. The research findings confirm the positive effect of the Government's work to encourage saving, with the majority of respondents thinking it is important to save. The research found that key influences on savings behaviour included role models and habits generated during childhood. Child Trust Funds, which aim to encourage and reinforce the saving habit during childhood, will ensure that every child will have a financial asset with which to start their adult life.