Even among people aged over 55, who are in the run-up to retirement, 28% are considering ISAs, with the increased interest in the accounts thought to be due to the annual savings limit being raised next month.
However, it was found that 66% of holders save into cash ISAs exclusively, despite just 10% being happy with the rates they receive, and 55% dissatisfied, raising concerns many are unaware of the alternative choices available to them.
MetLife UK wealth management director, Simon Massey, said: “The increase in annual ISA subscription limits from £15,240 to £20,000 in April this year highlights how much can be saved tax-free, and makes them a real option for retirement planning.
“But it is worrying that with so much ISA saving focused on cash ISAs that so few savers are happy with the rates they are earning. However, it’s understandable than many are nervous about investing their money in a traditional stocks & shares ISA when markets are uncertain.”
An ISA is a scheme which allows individuals to hold cash, shares and unit trusts free of tax on dividends, interest and capital gains – with the best fixed-rate cash ISAs currently paying just above inflation at 1.75%.
The MetLife research shows that financial advisors are welcoming the flexibility that pension freedoms, and the incoming ISA subscription limits are bringing, with 63% of retirement specialists having changed their recommendations on using ISAs.
This is also reflected among pension savers, with approximately 21% saying they are making more use of ISA’s for retirement following the introduction of pension freedoms.
“The ISA market attracted more than £58bn in contributions last year and the rise in contribution levels will provide another boost, but there has to be real choice aside from the higher return but riskier stocks & shares ISAs and the low rates of cash ISAs,” Massey added.
Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession