With the 2009 Budget almost upon us a number of financial experts are urging the British Chancellor to increase the tax free savings allowance available to consumers. These suggestions come after a leading trade body published research stating that the amount of retirement planning by the current population was alarmingly low.
The research by the trade body, The Association of British Insurers (ABI), showed that lower interest rates across the board had meant that consumers are paying back mortgages at a quicker rate as well as starting to pay back more long term loans and debts. It was pointed out that although this shift towards sensible spending by consumers was a good sign, more still needed to be done to encourage consumers to consider planning and saving for retirement. With this in mind it has therefore been recommended that the ISA allowance be raised considerably from £7,200 to £10,800 therefore encouraging consumers to start saving more as they will see greater returns.
A further survey by the ABI has suggested that 4 out of 10 workers are likely to face financial difficulty when retiring as on average 30 per cent of workers are failing to save anything towards their retirement. In addition to this around 13 per cent are failing to save enough money to provide an adequate pension when they retire. These alarming rates highlight the need to encourage consumer saving and increasing the tax free savings allowance is seen as a great way to do this although with the current economic conditions paying back mortgages and loans will continue to take priority.
A number of savers across the country are currently taking advantage of the tax free benefits of an isa. However it is hoped that by increasing the allowance more consumers will utilise a cash isa. The benefits of a cash isa can be highlighted by the use of a savings calculator, giving the consumer a rough idea of the income they can expect from their savings.