The Pep & Isa Managers Association (Pima) is lobbying the Treasury for individual pension accounts (...
The Pep & Isa Managers Association (Pima) is lobbying the Treasury for individual pension accounts (IPAs) to be replaced with a broader range of Isa products.
These proposals, included in Pima's budget submission, include the introduction of retirement Isas and of an Isa allowance for children. Tony Vine-Lott, the new director general of Pima, has asked the Chancellor to repackage the IPA as a lifetime retirement Isa, arguing that the IPA is not as transparent or as flexible as an Isa.
Under Pima's proposals assets invested would not be available for withdrawal until the specified retirement age or other conditions are met.
Vine-Lott also believes that Isas can form the base of children's savings products and said: 'The concept of 'Baby Bonds' is a welcome addition to the industry as it will provide additional savings opportunities but they should be introduced not to cause confusion to savers.'
This could, Vine-Lott argued, be done through the creation of a Junior or Child Isa, available with limitations until the investor reaches the age of 18 at which point it would transfer to the normal Isa vehicle.
Pima has not suggested what the annual allowance for either a retirement or child Isa should be.
The trade body has also proposed that the top limit of £7,000pa be extended beyond 2006, the date at which it is due to fall back to the intended £5,000pa.
Vine-Lott said: 'This would extend the acceptance by the Chancellor of the benefits of greater savings opportunities, which were recognised when the limits were increased until 2006. The amount could be further increased to allow for inflation and for the growing costs of old age as an acknowledgement of the importance of the scheme for long term saving and personal care provision.'
As flagged up in Investment Week two weeks ago, Pima is pushing for the ability for Isa investors to switch from cash to shares to give investors greater access to the higher return potential from equities. Overall Pima is keen for the Chancellor to allow investors greater flexibility in using their Isas.
It proposes that investors be allowed to withdraw funds from an Isa and replace those funds within the same or following tax year providing that they did not exceed the annual limits. However it suggests income withdrawals should be excluded from the replacement rights. PIMA believes it should also be possible for investors to carry over unused annual limits, in much the same way as pensions, to subsequent years.
Pima also wants Channel Islands and Isle of Man funds recognised as qualifying investments within an Isa, in the same way as funds incorporated in Dublin and Luxembourg. It also believes stamp duty on equities and unit trust investments within Isas and Peps should be removed.
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