45% of UK are missing out on tax efficient ISA savings

  • Almost half (45%) of people in the UK have absolutely no ISA savings for the purpose of retirement
  • However, for those who are saving into an ISA for retirement, the average savings total is £20,000, up from £8,000 in April 2015
  • Pensions are the main method of saving for retirement but ISA savings can help support retirement income

With ISA season in full swing and the start of a new tax year a week away, research from Aegon UK has found that almost half (45%) of UK working-age adults have no ISA savings for the purpose of retirement. This means that many people aren’t taking advantage of the tax efficiency ISAs provide to use them as a way to supplement retirement savings they have in pensions.

The government has progressively increased ISA limits over the past few years, reaching £20,000 in the coming tax year. Currently, those that do use ISAs to supplement their saving for retirement have a total of £20,000, up from £15,240* in April 2016 and well over double the £8,000** people had saved in April 2015. On average, men are more likely than women to use ISAs as part of their retirement saving, with an average pot of £26,000 compared to the £15,000 women have saved.

For those nearing the end of their working life, with a greater disposable income, ISAs, like pensions, become a more popular home for retirement savings. Those aged between 55 and 65 have on average £39,000 in ISAs that they have earmarked for retirement, almost double the £20,000 held by people ten years younger between 45 and 54 years old.

Steven Cameron, Pensions Director at Aegon UK, said: “Across the generations, pensions are almost always the most tax efficient way of saving for retirement, and employees also receive employer contributions to workplace pensions. But for an increasing number, ISA savings will provide an important supplement to their retirement income. While our research shows fewer than half of people are considering ISAs for retirement savings, it’s encouraging to see an upward trend in the value of ISA savings among those who are using these alongside pensions.”

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Important information

  • The value of an ISA will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested. An investment in a stocks and shares ISA will not provide the same security of capital associated with a cash ISA. The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.
  • The value of an investment can fall as well as rise and isn’t guaranteed. You could get back less than you originally invested.
  • The tax treatment depends on the individual circumstances of each client and may be subject to change in future.
  • This information is based on our understanding of current, taxation law and HMRC practice, which may change.

Further information:

Stephanie Melrose
PR Manager
Aegon UK
Tel: 0131 549 6743

Notes to Editors

  • In the UK, Aegon offers retirement, workplace savings and protection solutions to around two million customers and employs approximately 3,450 staff. More information: https://www.aegon.co.uk
  • As an international life insurance, pensions and asset management company based in The Hague, Aegon has businesses in over twenty five markets in the Americas, Europe and Asia. Aegon companies employ over 28,000 people and have millions of customers across the globe. Further information: www.aegon.com
  • Aegon is the Lead Partner of British Tennis.

*Aegon Retirement Readiness report, April 2016

**Aegon Retirement Readiness report, April 2015