ISA plans get another blow

The government’s plans to scrap PEPs in favour of Individual Savings Accounts, placing a #50,000 ceiling on investment levels, were dealt another blow last week when it was revealed even the Paymaster General favours a U-turn on the measure, writes Andreina Cordani.

Geoffrey Robinson is said to support measures to allow existing PEP accounts to continue alongside ISAs, or to allow PEPs to be included in ISAs without being counted towards the #50,000 limit on investments.

The concept of replacing PEPs with ISAs was first announced last year and caused an outcry from private investors, accountants and financial institutions. The plans met with widespread condemnation from financial industry bodies, including the Investment & Life Assurance Group, which came out against the proposals.

Nicola Hayes, director general of ILAG, said: ‘The government was taken aback by the strength of opposition to the scrapping of PEPs and the #50,000 limit.

‘Of course they were expecting PEP managers to kick up a fuss, but the entire industry has come out against the move as it stands. Now the government is looking for a way to change its plans without being accused of making a U-turn. It would be shocking if ISAs went ahead in their present form,’ she added.

The Treasury refused to confirm the possibility of a U-turn, but said responses from the consultation period were being taken into account.