You are here: Home - Retirement - Retirement planning - News -

‘Vote winning’ lifetime ISA will harm pension saving

0
Written by:
22/03/2016
The new lifetime ISA is a ‘vote winning’ strategy that could have a ‘detrimental effect’ on retirement saving in the UK, the boss of a financial planning site has warned.

The new style ISA – or LISA, as it has become known – was unveiled during last week’s Budget. Available from April 2017, it will allow people under 40 to save up to £4,000 a year and receive a 25% top up from the government, but the money must either go towards their first home or their retirement.  Early withdrawals will carry a 5% charge.

Before it is introduced, Mark Soper, co-founder of RetireEasy.co.uk, said more research needs to be done to calculate the effect the LISA will have on workplace pensions.

He said if savers are enticed into opening a LISA instead of a workplace pension, they will lose out on ‘valuable’ employer contributions.

“Once the gloss fades off this shiny, new product, we will see there is an insidious, popularist element to its launch. Initially a vote winner for the chancellor, it can only serve to decrease the amount of money savers set aside for retirement,” he said.

“The allure of the LISA’s early access and possible tax free withdrawals may lead to many workers withdrawing from or opting out of their workplace pensions with the associated loss of the employer’s pension contribution.

“At best, it provides a layer of complexity for an individual to consider before joining a workplace pension – which is counter intuitive to automatic enrolment; at worst, this could prove disastrous in the longer term for a healthy retirement plan.”

See YourMoney.com’s Lifetime ISA guide for full information.

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Another six months working from home: Expenses, benefits and insurance must knows

The government has changed its message on working from home, with those who can, encouraged to do so. Here’s w...
Another six months working from home: Expenses, benefits and insurance must knows

Nationwide savings bond offers chance to win £10,000

The 18-month Mutual Reward Bond pays an interest rate of 0.5% AER and gives existing members the chance to win...
Nationwide savings bond offers chance to win £10,000

Coventry launches Double Access Saver

Coventry Building Society is offering a savings account paying 1.1% AER which allows savers to access their mo...
Coventry launches Double Access Saver

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week

Read previous post:
junior isa
Which stocks are Junior ISA investors buying?

Online trading platform The Share Centre has revealed the best selling stocks held in Junior ISA portfolios last year.

Close