Clients are prioritising pension and ISA saving over general investments amid the rising cost of living, according to new research from abrdn.
Between Q2 and Q3 2022, the average amount invested in a general investment wrapper on abrdn’s Elevate platform fell by 11%. This compares to a 3% increase recorded between Q1 and Q2 2022.
In contrast, the average amount invested in self-invested personal pensions (SIPPs) between Q2 and Q3 2022 saw no change (0%), while the average value of investment in stocks and share ISAs increased by 2%.
Previously, average SIPP investments increased by 1% between Q1 and Q2, while ISA investments fell by 1%.
Jonny Black, strategic director at abrdn, Adviser, said: “This data suggests the rising cost of living is forcing people to reconsider what they do with the money they can afford to invest. We can see while people are cutting back on general investments, they are maintaining, or even increasing, pension and ISA saving.
“This is understandable. ISA saving offers clear tax benefits – which may become even more attractive now the government has announced the Capital Gains Tax (CGT) exemption will be reduced from April. And pension savers benefit from tax relief on their pension contributions at their rate of income tax, up to their annual allowance limit – essentially ‘free money’ back from the government.
“Ultimately, investors will continue to take steps to adapt their financial habits as inflation works towards its peak, and will continue to seek advice and guidance on what they should be doing, with what may be less money, to ensure they remain aligned with their financial goals.
“Advisers will continue to play a critical role in providing this support and in helping ensure clients continue to take a long-term view – keeping the right mix and balance of investments to deliver against their overall aims.”