Chancellor warned against delaying LISA launch as appetite grows

Its research shows that two thirds of of 18 to 24-year-olds are considering saving into a LISA, whereas over a third saved nothing into a pension pot in the last three months.

True Potential believes it is encouraging that 60% of 25 to 34-year-olds say the LISA is on their radar as a savings option while 41% of 18 to 24-year-olds are aware of LISA despite more than half of them being unaware of what pensions tax relief is.

Due to launch next April, the Lisa will give people aged 18 to 40 the chance to save up to £4,000 each year and receive a 25% government top-up. The funds can grow and be withdrawn tax free to go towards a first home purchase or for retirement.

However the LISA has received widespread criticism after it became apparent that employees would prefer to save into a Lifetime ISA than a pension, even if it means they would be giving up a potentially valuable contribution from their employer.

Former pensions minister Steve Webb warned that there "is a real risk of a mis-buying scandal" as those who are not taking full advantage of the matching workplace pension contributions on offer from their employer should not be taking out a LISA.

True Potential also believes, however, that employers should be permitted to contribute to their employees’ LISA – something that current rules do not allow.

True Potential Senior Partner, Neil Johnson, said: “The Lifetime ISA is certain to be popular among savers who are already enthused by it. I hope the Chancellor will use his Autumn Statement to reaffirm the Government’s commitment to the Lisa.
 
“Much of the scare-mongering around the LISA is about losing employer contributions. The simple way to address that is to allow employers to contribute to their employees’ LISA by making it available under automatic enrolment. That would prevent a surge people opting out of workplace saving schemes and means consumers could choose the right product for them without missing out on valuable employer top-ups.”