Why do over 65 have a higher Cash ISA limit in the budget??

A good rule of thumb I was once told is if you have £100 you take that, minus your age and that should be the proportion you split between cash saving and stocks & shares saving because of how long it takes to get a return

So a 20 year old would split their £100, £20 in a cash ISA and £80 in a stocks and shares

But a 70 year old would split it by £70 in cash and £30 in s&s

Way more people should have their money in S&S ISAs than currently - the British are insanely risk-averse relative to other countries.

If you are worried though, you can buy fairly low-risk ETFs, money market funds etc inside S&S which approximate cash.

Yes they may - so as I said this is Stick not Carrot, they could have left the threshold at £20k cash but done something else to encourage investments.

On the other hand, even having £1k left per month for the £12k limit still puts people in a pretty good financial position - it’s only an annual limit. I imagine there are far more people, young and old, putting less than the £12k limit in their cash ISA than those putting £20k in a year.

It’s because investing is more suited to those who have a longer timeframe (life). It allows for market corrections and to be able to see the benefits of the investments they’ve made.

Because shares etc are long term investments whereas cash isa is a guaranteed rate (so low risk) but no potential to perform better

In my late 60s and have gradually switched almost all my savings into cash ISAs because I'm going to need most of it sooner rather than later.
Can't risk losing any of it to a crash or poor returns as there will not be time to wait for the market to bounce back.
Have seen family and friends suffer major health setbacks from mid-70s onwards, so figure I've got 10 years of serious fun to fund!

So the answers above are correct.

But - younger people can have short term cash needs too (eg house deposits), so I think it’s probably still a bit unfair to give over-65s special treatment on this front.

I’d be interested to know how many people are putting £20k a year into their ISA.

why have different rules for pensioners? It strengthens the divide and the feeling of unfairness towards younger people trying to save.
You see what you want to see.
New stocks and shares investments are not good for pensioners because they won't live long enough to reap the reward. Feel better now?

And because older people may need access to their money

I think the idea is that when you’re young you have more time to ride out the ups and downs of the stock market, and in the long run investing in stocks and shares will make more money for you (based on historical performance at least).

Whereas when you’re older predictability is more important, which cash ISAs are better at.

It’s trying to nudge young people in the direction of long term investing.

To see the benefit of investing you need to be in it long term, 10 years plus, I assume it didn’t make sense to try and incentive older people to do this when they may not live to see returns

Stocks and shares are the ‘right’ answer for long term saving and investment goals.

The value varies over time, but over longer time periods have historically always out performed cash savings.

So for under 65s the set up encourages them to go for the ‘best’ option.

Over 65s Dont necessarily have that longer time frame to see the return over (implication, Theyre going to die soon, or need it for living / care costs) so cant plan on riding out the short term volatility.

Pretty obviously because they likely have less time available to see a return on what will be a more risky investment.

That said, it’s a very Stick incentive, more Carrot would probably have been better.

Quite simple really as younger people will benefit greater by investing in stocks and shares as they have time on their side to grow investments and therefore benefit from those, whereas the older generation wont.

I think the logic is that a stock market ISA will give a better return over the longer term so is to be encouraged for younger people. Older people don’t have the same time horizon.

Maybe because older people won’t be saving long term enough to see a return on their investments? Investments can take years to pay off. A 75 year old likely won’t live long enough for it to pay off.