Over-50s get back into ISAs

Investors aged 50-plus have more than doubled lump sum contributions into share-based Individual Savings Accounts in response to the Government's increase in ISA allowances, new analysis from Virgin Money shows.

Income funds have been the big winners with contributions increasing by around 130% between 6 October last year and 5 January this year, the analysis reveals.

And Virgin Money believes the increased allowance of £10,200 for the over-50s points to a continuing strong recovery in ISA sales in the run-up to the end of the tax year.

Investment Management Association figures show a record net £23.6 billion was invested in retail fund sales in the 11 months to 30 November 2009 - more than 10 times the amount invested in the same period of 2008.

Virgin Money figures show the surge continued in the three months from 6 October 2009 to 5 January 2010 with lump sum payments by the over-50s increasing by 120% following the change in allowances.

The figures showed that the largest increase in contributions for ISA customers over 50 was into Virgin Money's income fund growing over 130% between 6 October 2009 and 5 January 2010.

Grant Bather, spokesman at Virgin Money, said: "The decision by Chancellor Alistair Darling to increase the ISA threshold to £10,200 for the over 50s has been very popular.

"With the ISA allowance of £10,200 to be extended to all savers in the new tax year we would urge all investors to consider making the most of the increase in the tax efficient allowance."