Cutting the cash ISA is a milestone towards creating a nation of investors, says AIC

The Association of Investment Companies (AIC) has commented on the reduction of the annual cash ISA limit from £20,000 to £12,000 announced in today's Budget, along with an exemption for those over 65 who will be able to continue to save up to £20,000 in cash ISAs.

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “This is a carefully considered solution that promotes the benefits of investing in the stock market for the long term, whilst addressing concerns of older savers who prioritise financial certainty.

“Cutting the cash ISA limit is a milestone towards creating a nation of investors. Combined with the planned advertising campaign, changes to risk warnings and the FCA's targeted support initiative, it will all help people make better long-term investment decisions. We need a strong investment culture in the UK and it is encouraging to see the government starting to build the foundations for this.

“The new cash ISA limit will incentivise more than 2 million¹ people to start investing in the stock market – rather than taking the risk of their long-term savings being eaten away by inflation. Of course people need to save cash for a rainy day, but encouraging them to move beyond that will improve their financial resilience, achieve better financial outcomes and bring benefits to the broader economy.”