Finally... ISA increase... sort of

ColdIron

Swipe said:

older_and_no_wiser said:

I think there would be a lot of people who would invest in this rather than a regular ISA if it was marketed well. Obviously nobody on this forum and those who are knowledgeable investors. However, a large percentage of the population aren't too clued up and the lure of a UK investment would be tempting. Maybe for the same reasons that Vanguard LifeStrategy funds are popular because they have UK bias.

I disagree, apart from moving my inherited Lloyds shares into it, it doesn't really interest me unless I can add funds to it rather than company shares.

It's one of the questions in the Consultation document. The Government is in favour of it

• 2.7 The government could also replicate a previous approach for collective investment vehicles in PEP for the UK ISA. When introduced, PEPs allowed investments in authorised unit trusts and / or investment trusts if at least 75% of the value of the investments held by the fund were invested in eligible UK companies.

boingy

I don't think most people have a gloomy outlook on the UK. The whole world has had a crappy time with Covid and other stuff, and the press and politicians love talking the country down but, actually, as a country we'll be fine. I'm feeling optimistic for the future.

(And, yeah, most people who invest in Vanguard Life Strategy have no idea of its make up, just like most people don't know how their pension is invested or what charges they are paying.)

EthicsGradient

The Financial Times commentary on this is quite funny - if you don't have a subscription, search for the article title, which is 

"The UK ISA announcement: pretty much meaningless"

and that gets you past the paywall. Includes 2 graphs titled "!!!!!!-covering graph" (note for reader: apparently the FT can use ruder words for their graph titles than MSE allows. Apologies to the very-easily-offended). They note

There’s a smidge more clarity in HM Treasury’s press release, which — as well as accidentally calling today’s fiscal event the “Autumn Statement” —drops the e-bomb:

"Pensions and savings reforms, including the introduction of a new UK ISA allowing an additional £5,000 annual investment in UK equities tax-free and new British Savings Bonds offering savers a guaranteed rate for 3 years, will deliver better returns for savers. "
...
There is much to consider, but also little:
 — from an investor perspective, the UK ISA is likely to be just a tax bung to high earners, rather than a materially reshaping the domestic retail market for UK assets
 — from a UK market perspective, we have no way of knowing how much investment it will unlock, and we don’t know what assets the money will go to

EthicsGradient

Audaxer said:

older_and_no_wiser said:

Obviously nobody on this forum and those who are knowledgeable investors. 

I think some knowledgeable investors, on this forum or elsewhere, who have used up their existing ISA allowances, could possibly use the other £5k allowance pa that a UK ISA would give them, to effectively move some of their UK funds/ITs into the UK ISA. They could do that by selling a UK fund(s) in their existing ISA and rebuying it in the new UK ISA. This would give them a further £5k available within their existing S&S ISA to increase investments in global funds/ITs. So I think they could balance it so they still have the same overall weightings of UK and global funds in their portfolio that they had originally.

Which might make "ex UK" funds more popular - Vanguard has a "developed world ex UK" index fund, I'm not sure about others. This would allow people who have used their main £20k allowance to sell a developed world fund in their existing ISA, buy an ex UK fund with most of it (UK is typically about 4% of a developed world index), and contribute the remainder into the UK ISA, keeping the same balance. Which would defeat the government's objective, of course, but it's what many investors would want to do.

Alexland

My guess is the UK ISA won't happen anyway either scrapped during consultation as a bad idea or the new government won't be interested in implementing it. ISA managers would probably be better spending their development budget on other things.

hallmark

What were the "pension reforms"?

silvercue

I like this idea and if it is available this coming FY I will add £5k.   Will be using the standard £20K limit on 6th April anyway.  

mebu60

silvercue said:

I like this idea and if it is available this coming FY I will add £5k.   Will be using the standard £20K limit on 6th April anyway.  

Consultation until June. Unlikely to implement until April 2025, if ever. 

I'd be interested to know what proportion of the MPs' pension fund is invested in 'the UK' (when they have defined what exactly that covers). 

boingy

silvercue said:

I like this idea and if it is available this coming FY I will add £5k.   Will be using the standard £20K limit on 6th April anyway.  

Don't hold your breath. The replies to the consultation are not due back until June, then the Govt boffins have to figure out how to make it work, then the providers have to figure out how to make it work, and I don't imagine either of those processes will be quick! If it was easy they would already have reached a consensus.

Someone suggested the product might launch in April 2025 and that feels about right to me.

ColdIron

mebu60 said:

silvercue said:

I like this idea and if it is available this coming FY I will add £5k.   Will be using the standard £20K limit on 6th April anyway.  

I'd be interested to know what proportion of the MPs' pension fund is invested in 'the UK' (when they have defined what exactly that covers). 

It's a final salary DB pension so there is no pot of money like a DC pension