A recent investigation has uncovered information that a mere handful of the nearly 250 cash ISAs that are available to consumers will permit them to access their accrued interest monthly instead of annually.
ISAs, a specialised savings account that is free from any tax constraints, have been available to consumers since 1999. Savings-minded consumers who have contributed into their ISA consistently every year have accumulated in excess of £50,000; included in that figure are funds from previous schemes that had been re-invested in their ISA.
Though the interest rates set in place on ISAs at low levels, a pensioner can generate a sizable sum from an ISA that permits monthly accrual.
Currently, the highest interest rate on cash ISAs hovers at approximately 4 per cent. That would increase one’s income by roughly £164 every month with an ISA balance of £50,000. Most financial institutions that offer ISAs, such as building societies and banks, may not be particularly interested in aiding pensioners convert their lifetime savings into accessible income, however.
Save Our Savers spokesman Jason Riddle, in a statement on behalf of the savings campaigners, stated that though the ISA was at one time an exemplary financial product in regards to savings, but a combination of a sickly market and lowered interest rates have been undermining the benefits that the tax-free savings accounts were designed to enable.
Riddle concluded his statement by pointing out that ISAs are failing to adapt to the current needs of the UK consumer concerned with his or her savings, and the lack of ability to access any accrued interest monthly is just another symptom of the problem.
Financial Secretary to the Treasury Mark Hoban has gone on record stating that ISAs, which is a governmental financial product due to its tax-free nature, need to be transparent, simple, flexible, and competitive. According to Mr Hoban, in excess of 17m people in the UK now hold ISAs in order to grow their retirement savings.
Experts have countered Mr Hoban’s statement by saying that true flexibility will only occur when more building societies and banks begin to offer consumers seeking a regular income an option to increase the frequency of accessing their accrued interest.