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ISAs attract women and young savers. Pearson May News Update - Thursday 18 February
ISAs attract women and young savers
More women and young people have been turning to Individual Savings Accounts (ISAs) since their introduction, new research suggests.
ISAs first appeared on the scene ten years ago as a tax-free incentive to saving.
A report by the Halifax indicates that the proportion of women who saved through ISAs increased by 52 per cent during the first seven years of the account's existence.
Data also suggests that ISAs are an increasingly popular way among the young of setting aside funds for a mortgage deposit.
The research makes use of information provided by the Bank of England, HM Revenue and Customs and the Department for Work and Pensions.
Almost two in five households in the UK (37 per cent) have an ISA account. The total increased by 53 per cent in the nine years to March 2009, the equivalent to 14.2 million savers.
There has, however, been a marked decline in the average amount paid into each account. In 1999/2000, that figure stood at £3,064, but by 2008/09 it was down to £2,636. One reason for the fall has been the effects of the credit crunch and the recession.
Over the course of the first seven years of ISA accounts, more men than women joined the scheme. But the proportion of women opening ISAs has been gathering pace. Over that same period, the number of women signing up to ISAs climbed by 52 per cent compared with just 35 per cent among men.
Younger people have also tended to find ISAs attractive. The under 25s, perhaps keen to save for a mortgage deposit, registered the biggest demographic increase in ISA savers over the nine-year period, rising by 85 per cent.
First-time homebuyers in the 25-34 age bracket, hobbled by mortgage repayments, represent the smallest group among ISA savers at just 24 per cent.
While the south east of England still lays claim to the highest national proportion of ISA savers, it is being caught by Scotland where numbers have been growing at their fastest rate.
Under the rules, a saver is only allowed to open one cash and one stocks and shares ISA each year, whichever the provider. Cash ISAs are the most popular, the Halifax study reported.
Recent changes in the regulations means that the total amount individuals can save in an ISA account in a tax year is rising from £7,200 to £10,200. Half of that new total - £5,100 - can be lodged in a cash account and half in a stocks and shares account. Alternatively, the full sum can be paid into a stocks and shares account.
As of October 2009, the over-50s - or those born on or before 5 April 1960 - could take advantage of the new thresholds. But as from 6 April 2010, anyone will be able to make use of the improved limits.
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