While many under-18s are still in full-time education and don’t pay tax the Government has estimated that around

While many under-18s are still in full-time education and don’t pay tax, the Government has estimated that around 100,000 teenagers who are working will benefit from being able to save in ISAs.Halifax, which already has over 1.4 million cash ISA customers, is even more optimistic. Welcoming the Chancellor’s decision, the Halifax said that there were 675,000 young people aged 16 or 17 in employment in the UK who could benefit from opening a cash ISA. The bank also said that more people took out ISAs with the Halifax in the first three months of their existence (April 1999 to July 1999) than took out TESSAs with them during their entire first year.The Chancellor also created new opportunities for PEP holders. PEPs, which were replaced by the more popular ISAs last year, are currently restricted to European stocks. Mr Brown said they can now be invested in shares listed outside the European Union.

The move will put PEPs on the same footing as ISAs, which are not restricted in this way.Jason Hollands, deputy managing director of Best Investment, said the move will give PEP investors the chance to put their money into some strongly-performing shares that are currently off-limits.He said: “Investment markets are highly globalised and many of the largest and most successful companies are quoted outside the European Union. It makes no sense to discourage investors from benefiting from the opportunity offered by such companies.”PEPs were also made easier to administer by allowing investors to make changes to their fund over the phone. Previously they had to put instructions in writing.Peter Shipp, chief executive of the PEP and ISA Managers Association (PIMA), welcomed the plans for ISAs, but said he was disappointed that the Government had not allowed an amnesty for those who unintentionally broke ISA regulations last year by exceeding the amount of the fund which can be invested in cash or shares. Under the ISA rules, you can put up to £3,000 in cash and £1,000 in life insurance, with the remaining £3,000 in shares Alternatively, you can put the whole £7,000 in shares. Mr Shipp said: “You have to wonder whether the rules need to be as complicated as they are.”Mike Warburton, senior tax partner at the business adviser Grant Thornton, echoed the view, saying: “It was a missed opportunity to reform and simplify ISAs.”Polarisation The Treasury also launched a plan to change the rules governing the sale of financial products in a bid to increase consumer choice.Under the proposals, any company will be able to sell a stakeholder pension or kite-marked ISA that is provided by any other company.

This is a break from the current rules, which allow companies only to sell their own products.. The trouble with having a Government obsessed by spin is that when it comes out with a pre-Budget report, most of the stuff has already been remorselessly trailed in the papers beforehand. Having said that, the Chancellor Gordon Brown’s boost to pensioners is welcome, despite being mostly what had already been reported – £5 a week extra for individuals, £8 for a couple. The trouble with having a Government obsessed by spin is that when it comes out with a pre-Budget report, most of the stuff has already been remorselessly trailed in the papers beforehand. Having said that, the Chancellor Gordon Brown’s boost to pensioners is welcome, despite being mostly what had already been reported – £5 a week extra for individuals, £8 for a couple.
Mr Brown didn’t go as far as to restore the link between the state pension and earnings, the vital link broken by Margaret Thatcher’s Government in 1980. But the increase in the means-tested top-up, the minimum income guarantee (MIG), was useful, as was the introduction of the new Pension Credit (details on page 1).The latter was especially welcome, since it should help those on modest incomes who have saved prudently (the Chancellor’s favourite word – he used it seven times in his pre-Budget report) or who have an occupational pension.

Many of these people have incomes which are just above the MIG cut-off point, and therefore feel unfairly penalised for having saved in the first place.The Government hopes the new Pension Credit, when it is launched in 2003, will reward savers for every pound they put away towards retirement, rather than just relying on the MIG to support them. The only downside to this is that it may introduce a new layer of red tape.Unfortunately, all these increases are not going to reverse the huge demographic changes taking place which will eventually see the number of retired people in the UK overtake the size of the working population. Coupled with the break in the link between the state pension and earnings, it means the Government is never going to be able to deliver a size of pension that can cover more than the bare necessities.This means that alternative ways of saving for retirement are now more important than ever. ISAs are far more flexible than personal pension plans in this respect, so it is gratifying that Mr Brown extended the £7,000 upper investment limit for ISAs for another five years. The maximum investment for ISAs was supposed to go down to £5,000 this year, but Mr Brown extended the first year limit of £7,000 at the very last minute in his April Budget.It is a shame the Chancellor didn’t go further, and simplify the confusing nature of this savings scheme. Many thousands of perfectly honest savers have bought both mini- and maxi-ISAs, which you cannot hold at the same time What will happen to them is still unclear. An amnesty is the most obvious answer, but Mr Brown is yet to grasp this particular nettle.I can’t say I am surprised that the Chancellor refused to abolish stamp duty on share deals.