An alarming set of data has come to light. Over three million pensioners are holding all of their ISA savings in cash!1
The analysis highlighted that during the most recent year for which figures were available (2018/19), there were 5.8 million over-65s holding ISAs, valued at just over £305bn in total, the average amount held was £52,500. However, 3.4 million of these were holding an average of £25,383 exclusively in cash ISAs, with a total amount of £87bn sat in these vehicles.
With very few of these 3.4 million pensioners likely to be earning interest of more than 1%, and many considerably less, former Pensions Minister Steve Webb commented, “Whilst holding small amounts of cash in an easy access account can be convenient, these figures show that huge amounts of money are sitting rotting in cash ISAs. Inflation is like a tax on savers. With inflation soaring, the spending power of cash savings is being savagely reduced. Many instant access cash ISAs pay little or no interest and runaway inflation will take a huge chunk out of the value of these savings.”
He continued, “Older savers need to consider urgently whether keeping their money in these cash accounts is the best way to protect their hard-earned savings, especially when the real value of their State Pension is also being squeezed.”
1LCP, Freedom of Information, 2022