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Osborne's election-edged Budget means older savers are in the money

It may have been a Budget for bingo and beer, but after five years out in the cold it was savers and near-pensioners who hit the Chancellor's pre-election jackpot last week.

"Like the proverbial number 13 buses, a whole raft of policies has all come at once - and they are good news," said pensions campaigner Dr Ros Altmann. "It's also a brilliant Budget for Tory election prospects, of course."

From July 1, the old Isa - ­Individual Savings Account - regime is swept away. The Isa ceiling is upped from a temporary £11,880 (but only £5940 in a cash Isa) to £15,000, with no limit on cash. Standard Life is advising customers: "You don't need to do anything, as all Isas will convert to become Nisas (new Isas) with the higher limit and flexibility from July a."

But the changes ought to spark new products and better rates. Andrew Hagger of Moneycomms.co.uk says: "Let's hope the banks and building societies who pushed for increased limits and the ability to switch between equities and cash don't let the side down by continuing to offer derisory savings returns."

Of the savers stashing away the maximum £5760 in their cash Isa last year, over half were on incomes of under £20,000, according to the Halifax.

Low income savers weren't neglected. The 10% tax rate on savings income up to £2790 has been scrapped, a zero rate will now apply up to £5000, and that adds to the zero tax rate on income of £10,000, which will rise by £500 next year.

"This means that anyone with total income of less than £15,000 will no longer pay any tax on their savings income," says Malcolm McLean at ­consultant Barnett Waddingham. "This will simplify the tax system for more than one million savers who will no longer be liable for any tax on their savings."

From April 6, the £10,000 personal allowance will save 20% taxpayers £112 and higher-rate payers £195, because the starting point for 40% tax has been lifted by 1% instead of cut as in previous budgets.

For those who can invest the new maximum £15,000 a year, and stake it on a stocks and shares Isa, a 5% a year return would build a £1 million Isa in 27 years, according to Brewin Dolphin.

Isas have already been opened to Alternative Investment Market stocks, and will now be extended to social lending accounts from the likes of Zopa.

For more modest savers in the grey market, a Pensioner's Bond likely to offer rates of 2.8% for a one-year term and 4% for three years will be available next January from National Savings and Investments, which will also lift the annual limit for premium bond holdings from £30,000 to £50,000.

For those saving for retirement, there is a revolution. After the age of 55, a pension pot can now be converted into cash, with no need to buy an annuity. Restrictions on income drawdown, where the pension is professionally managed and provides an income, are substantially lifted. Anyone with up to £30,000 of "stranded" pension pots will be able to convert them into cash.

The ­Chancellor promised a Government-backed guarantee of face-to-face advice on pension options for everyone.

Phil Loney, chief executive at mutual insurer Royal London owner of Scottish Life, says: "We trust that the Financial Conduct Authority and Financial Ombudsman Service as well as the industry will be involved in designing this advice process, because current regulation does not permit good quality at-retirement advice to be offered at a reasonable cost to the consumer."

As Donald Fleming, pensions partner at KPMG, observes: "The Budget turns the world of pension savings upside down. With almost unrestricted access to pension pots in future, this will radically affect the way today's workforce saves for tomorrow. But with more decisions to be made comes more responsibility, and greater risk."

Gwen Nelson, 68, saves £10 a month into her Scottish Friendly Isa but sometimes puts a lump sum in to boost her pot. She volunteers to teach English abroad and will spend the savings on an English teaching course.

Nelson, from Errol, Perthshire, says a rise in savings rates would be better than lifting the ISA limit.

"I don't think things are going to improve much for at least 10 years. I think my ISA is one of the better ones. What I want is something that offers a bit of security."

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