Pension and ISA savings should be linked, Fidelity International has claimed.

In its savings manifesto – which seeks to improve the savings habits of households across the UK – Fidelity calls on the political parties to take note of a number of proposals, including the suggestion to link ISA savings to pension savings.

Fidelity proposes that the Government should allow transfers from ISAs to pensions in excess of the annual cap on pension contributions. The manifesto states:

“There is considerable merit in promoting an easy to understand, whole of life approach to savings and we believe that Government should formally encourage the transfer of ISA savings into pension savings.”

And these ISA transfers should be permitted notwithstanding any annual limits on pension contributions, Fidelity urges, which would mean that they would be permitted in excess of the annual cap on pension contributions.

“This would encourage the build-up of savings in the earlier years of working life in anticipation of being able to make enhanced pension contributions closer to retirement,” Fidelity claims.

Adding: “In earlier years, savers would retain flexibility over access to their ISAs until they were ready to lock their savings down in a pension.”

Further ISA related proposals from Fidelity include a small cash bonus on entry into an ISA, with subsequent payments on each anniversary.

© Fair Investment Company Ltd