Older savers most impacted by Rachel Reeves' Cash ISA reform demand their voices be heard

The voices of older savers most likely to be impacted by Rachel Reeves impending Cash ISA reform must be "listened to" with 76% of older people opposing the move, a top building society expert has demanded. It is predicted that the mooted changes to the £20,000-a-year tax-free allowance would have the biggest negative impact on ordinary savers, with pensioners left worse off and potentially pushed towards inappropriate higher-risk investments that could harm their life savings.

Newcastle Building Society previously warned there is a "misguided" assumption in the Chancellor's plans that cash ISA savers could just as easily and comfortably invest in the stock market. The proposed reforms set to be unveiled by Ms Reeves at her Mansion House speech next week, are thought to include a reduction in the annual allowance from £20,000 to £4,000. Instead, savers would be encouraged to put more money into stocks and shares savings accounts, thereby boosting investment in UK companies. But Harriet Guevara, chief savings officer at Nottingham Building Society, has now called on the chancellor to listen to "ordinary voices" before rubber-stamping her move.

Her society found that 55% of all savers surveyed oppose the move, rising to 76% of over-55s. 78% believe the government should be encouraging tax-free saving through tools like Cash ISAs - not discouraging it.

She said: "As we await potential ISA reforms in the Mansion House speech, it's vital that the government listens to what savers are telling us. Our data shows that more than half of savers oppose any reduction to the Cash ISA allowance, rising to over three-quarters among the over-55s. "For many, this isn't just about tax efficiency, it's about having a secure, accessible way to build an emergency fund, save for retirement or put down a deposit on a home.

"What's more, more than half of our fixed ISA customers used the full £20,000 allowance last year, rising to 65% among our branch savers. This tells us that large numbers of people are actively relying on all of the current allowance to meet their long-term financial goals.

"Cash ISAs remain a powerful tool for financial resilience. Yet if the allowance is cut, one in three savers say they'd simply save less, and only 38% would consider switching to riskier stocks and shares options. Among 25-34 year olds, two in five say such a change could impact their ability to buy a home, exactly the kind of long-term aspiration we should be supporting."

The Daily Express revealed this week how the cut of the tax-free ISA limit to encourage bigger investment in stocks and shares will be shunned by older cash-loving British savers.

Harriet added: "But it's not just about savers, it's about borrowers too. ISAs held with mutuals like Nottingham Building Society directly support lending to aspiring homeowners. Cutting the Cash ISA limit risks limiting that lending power, which runs counter to Labour's own ambition to double the size of the mutual sector.

"The government's review is an opportunity to modernise the ISA system, but reforms must be centred around savers' needs, not at their expense. Optionality, simplicity and flexibility should be the guiding principles. Restricting the Cash ISA risks pushing people into products they don't fully understand, or out of the savings habit altogether."

Nottingham Building Society research shows that only 38% of Cash ISA holders would consider switching to a Stocks and Shares ISA if the allowance is cut, while one in three - equivalent to an estimated 2.5 million people - say they'd simply save less.

The data also revealed a fifth (20%) of Cash ISA savers say a cut to the allowance would affect their ability to put down a deposit on a home - rising to 41% among 25-34-year-olds - while 34% fear it would hit their retirement saving, and 36% say it would harm their ability to build an emergency fund.