Newcastle Building Society analysis of customer data finds that older savers with modest balances will be hit hardest by proposed changes to the Cash ISA allowance.
Our customer data shows that the typical Cash ISA customer:
- is a modest saver
- comes from a low-to-middle income household
- relies on traditional savings
- is building towards or managing their retirement
Our ISA customers are typically older or approaching retirement. Two-thirds (67%) are over the age of 60, and around 50% are past the state retirement age.
Of those over 60, almost half (45%) are likely to be living in smaller homes after downsizing. Those aged 45-54 are typically working families with moderate savings balances.
The vast majority (79%) have less than £50,000 saved, with many older savers managing on a budget, having placed their trust in accessible tax efficient savings in their later years.
Brian Stobbs, customer at our Consett branch
“I’ve been a loyal Cash ISA saver since the 1990s, and am proud to say that in more recent years I’ve been able to make full use of my tax-free limit. My ISA provides the access and freedom myself and my wife Kathryn want to be able to enjoy our retirement on our terms. I’m not keen on risk and I don’t want to be forced into a Stocks and Shares ISA where my money could be gambled on the markets, or feel like I’m bank-rolling the economy. Forcing me into a risky product undermines everything a Cash ISA stands for.”
Andrew Haigh, our Chief Executive Officer, said: “Restricting Cash ISAs in the hope that savers will be enticed towards higher-risk products which may not be suited to their needs or risk appetite, could have serious negative consequences for many of our customers.
"There are some misguided assumptions about the people who choose to save their money in a Cash ISA that need to be corrected. Typical Cash ISA customers have relatively modest savings. And whilst few Cash ISA customers are unlikely to be able save to the annual ISA limit every year, many accumulate their ISA savings over time and rely on the higher limit for strategic planning – using windfall events such as inheritance, redundancy, or property downsizing to build a source of financial security and wellbeing in later years.
“This financial resilience demonstrates the success of the Cash ISA, and is exactly what policymakers should be encouraging, supporting healthy savings behaviour through advice and information rather than limiting choice and accessibility.”
Download the press release (PDF, 109kB).
