ISAs to be reformed next year

By Jennifer Hill

LONDON (Reuters) - Moves to encourage people to save in tax-efficient accounts will come into force next year, the government has announced.

Economic Secretary to the Treasury Ed Balls said reforms designed to make individual savings accounts (ISAs) more flexible would come into force on 6 April 2008.

The move, following consultation with the savings industry, comes at a time when the government is faced with the challenge of trying to close an estimated 57 billion-pound savings gap and the rising costs of an ageing population.

Balls said: "ISAs are a vital part of our approach to promoting saving.

"The reforms we will introduce next year will make personal saving simpler and more flexible than ever, and encourage every individual to save."

Richard Saunders, chief executive of the Investment Management Association (IMA), said industry figures had expressed concerns over a potential implementation date of April 2007 -- and welcomed the later date.

"The decision to defer the introduction of the changes until 2008 is a sensible one," he said.

"IMA and others argued that April 2007 would leave insufficient time to implement the new systems required."