News
‘Vote winning’ lifetime ISA will harm pension saving
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)
Why NS&I may need to trim interest rates for millions of savers
Savers continued to plough money into National Savings and Investment (NS&I) in April, though at a slower...
NS&I makes it easier to top up Premium Bonds
NS&I has started rolling out an alternative way to make payment, which should make it easier and more secu...
How to get 9% interest without tying up your savings for years
You don't have to lock your money away for years to get above-average returns on your savings.
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
© AE3 Media Ltd, Floor 7, Lincoln House, 296 - 300 High Holborn, London WC1V 7JH, Company.