Mixed response to Govt’s JISA change

With the news the Junior ISA (JISA) savings limit is set to increase to £9,000 by 2020/21, according to Wednesday’s Budget, the Government’s announcement has created mixed responses from experts in the financial services sector.

The Budget revealed that the limit would be more than doubling from the current £4,368 to £9,000, reflecting the the biggest jump in the allowance since the JISA launched in 2011.

AJ Bell personal finance analyst, Laura Suter, suggested the move was “unlikely” to help many households.

“With the average subscription per account being less than £1,000 it’s unlikely to be a boost many households will use,” she commented. “The move to hike the JISA allowance but keep the main ISA and Lifetime ISA rates the same means it only benefits a smaller group of people – making the move cheaper for the Government.

“The increase in allowance means a parent starting next month for a newborn child could build a tax-free pot of more than £240,000 by the time their child reaches 18, assuming they put the maximum in each year and it grows by 4% every year after charges.”

Commenting on the potential tax-free pot of newborn child reaching £240,000 after 18 years, however, Close Brothers head of financial education, Jeanette Makings, suggested: “The Government’s decision could in fact be one of the most significant aspects of the budget for the UK’s long-term financial health.

“The most impactful solution to the savings crisis is to start saving early and to build good money habits – including regular savings. This change in the JISA limit will further encourage parents and grandparents to start children and grandchildren on the savings ladder early and set an example for good savings habits.

“This could be just the financial head start that the new generation are looking for not only to start them off with a bedrock of savings at the start of their adult life, but also as a really tangible example to their own future savings plans showing them the benefit of saving regularly and how even relatively small amounts can build over time.”

Foresters Friendly Society CEO , Rachel Hardy, added: “It is good to see the Chancellor has not overlooked the importance of helping families build a firm foundation for their financial future. With the cost of living continuing to rise, announcing the amount they can save into a JISA or Child Trust Fund (CTF) will be more than doubled in 2020-21, is an extremely welcome move.”

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