Large employers may begin offering a lifetime or workplace ISA as part of their employee benefits package within the next five years, Willis Towers Watson research has revealed.
More than two-thirds (70%) of large employers told the consultancy they were considering offering either of these products, with 13% "extremely" or "very" likely to do so.
The lifetime ISA (LISA), launched on 6 April, is a tax-free savings vehicle which allows young savers aged between 18 and 40 to put away up to £4,000 per year and then receive a 25% bonus from the government. This money can then be used to fund a deposit for a first-time home, or for use in retirement.
The consultancy's findings, which came from a survey of 130 employers in 2016, also showed 50% of employers may allow employees to take employer pension contributions as cash, which they could then use to save in a different vehicle.
However, just over one in ten (11%) said the full pension contribution would be exchangeable, with the remainder offering a pension-or-nothing arrangement.
Just a handful of providers currently offer the LISA, which some have blamed on the potential consequences the product could have on workplace pensions, while others have said the short implementation timeframe was at fault.
Senior consultant Minh Tran said these employers were looking to provide a wider range of benefits for a diverse workforce.
"Despite a slow start on the provider side, our research suggests the LISA and WISA are set to become an integral part of workplace savings in the very near future and that a clear trend of early adopters has started to emerge," he said.
"Employers tell us that a key driver for wanting to offer a LISA or WISA is to provide a competitive reward package to attract and retain the right employees. They are embracing the evidence that a diverse workforce has a wide range of financial needs and, therefore, the LISA and WISA in conjunction with existing pension plans can help to address employees' short, medium and long-term saving needs."
Tran added flexibility and personal choice will appeal to savers of all ages.
"This highlights the importance of establishing new workplace saving vehicles that interact seamlessly with the employer's reward design, including existing pension plans and other benefit arrangements," he continued.
Willis Towers Watson's research followed a Centre for Policy Studies proposal, published earlier this month, to combine the auto-enrolment regime with a LISA and WISA. PP has explored the possible future of the LISA.
More than half of BlackRock’s flagship UK defined contribution (DC) default fund’s assets will be invested in ESG strategies by June 2021.
Graeme Bold says the right communications can improve both the level of savings and the outcomes for savers.
More than half of UK savers agree they are unable to save sufficiently to achieve the retirement they want, according to research by BlackRock.
Pension savers have held off from making changes to their pensions despite nearly half having been impacted by the pandemic, research finds.