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

[Hungryhippos123]

Cash ISA limit has been slashed - but some people are exempt | Money News | Sky News

I am asking because I don't understand the logic. Why do over 65s get a higher cash ISA limit? Why not younger people too? I understand the logic behind making the stocks and shares ISA more attractive to encourage investment but why have different rules for pensioners? It strengthens the divide and the feeling of unfairness towards younger people trying to save.

Exactly this

Young people often need that amount of money for house deposits. My DC need their money to build up, not fluctuate.

But unless one buys an annuity on retirement, which only about 10% do, then that advice is wrong, and will lead to worse outcomes for the retired.

Look at it this way, if one spends 40 years between 25 and 65 contributing to a personal pension that starts ‘life styling’ 10 years before retirement, then you’ve got 30 years of full growth potential in your pension. But if you retire at 65 that fund might need to last 30 years - and not being in equities for that length of time will lead to worse outcomes.

There’s no way that over a 70 year investment horizon starting to move out of equities less than half way through will deliver the best return. If one is going to use one’s pension fund to generate income by drawing down you will get better outcomes by remaining in diversified investments. Something the chancellor, with her taxpayer funded defined benefit pension, doesn’t understand or have to worry about!

Yeah I invested in a “low risk” stocks and shares isa with fidelity and lost thousands over a ten year period. Obviously low risk doesn’t mean no risk. But I get for older people low risk could be unacceptable. I’ve moved my money into vanguard and am hoping it gets back up in the next 15 years or so. An older person wouldn’t have that time.

Seriously?

A young person who can save 20k per year, as a couple, its still 24k per year (cash), is not the sort of person the tax payer should be helping, the chances are if they are saving 20k on more modest incomes, its come from their parents, who may even be the main beneficiaries.

BTW, plenty of people in their 60s invest in the stock market, they "could" easily have another 20 years left.

It’s a matter of balance as you get older. If some of your retirement funds are in ISAs, chances are many of your existing ones will be S&S already.
The thing I’m not clear about is whether you can now move any existing ISAs out of s&s into cash ones if you’ve reached a point of wanting to protect against volatility - I think you used to be able to transfer between the two types freely. If thats now limited it could be a significant problem.

The cash ISA was always a bad idea.

Anyone who wants cash-like risk and return can always do that in a S&S ISA by choosing a cash-like investment. People who absolutely insists on a cash deposit instead already have a £500 or £1000 tax-free interest allowance (except higher rate taxpayers).

Yet another complexity given yet another complex twist, for a policy that in aggregate drives returns lower for people and makes capital raising for UK businesses more expensive.

Yes, and tax free savings will always beat savings where tax has to be paid on the interest.

True except that there’s already a £500 or £1000 tax free interest allowance. And depending on inflation and interest rates, cash often delivers a negative real return.

The govt has put in a lot of incentives to stay in cash and now seems surprised that people have done so.

The gov is reviewing ‘cash like’ investments held in stocks and shares ISAs. So holding cash in money market funds for income in retirement might be banned from those too.https://www.gov.uk/government/publications/tax-free-savings-newsletter-19/tax-free-savings-newsletter-19-november-2025

money market funds are being reviewed by the government as being legimiate holdings in an SS ISA https://www.gov.uk/government/publications/tax-free-savings-newsletter-19/tax-free-savings-newsletter-19-november-2025

The key thing to remember is that this only applies to new savings. If you have a cash isa already then that can stay untouched. This impacts only people with surplus income now that want to save it. I’d suggest that a pensioner with surplus income to invest now probably isn’t living on the breadline and doesn’t need to access an enhanced ISA allowance more than, say, a 20 something saving for a house deposit. It’s pure politics dressed up as economics.

I think this.

A person over 65 and still working may have a need to access a risk free enhanced ISA allowance in order to fund their retirement.

And a 20-something might need a house deposit (to rent or buy) in the next couple of years.

Then they should be looking at a LISA with its associated 25% government bonus (worth up to £1k p.a.) that over 65s aren’t eligible for.