Helen Morrissey gets over the fact she is too old for a Lifetime ISA and has decided she never wanted one anyway.
Two weeks ago I wrote my leader on how the chancellor had dropped plans for a massive overhaul of pensions tax relief. However, any hopes of a quiet Budget for pensions were dashed with the chancellor unveiling a Lifetime ISA (LISA), which the under 40s can use to save either for a house deposit or for their retirement.
Once I'd gotten over my annoyance at the fact I will be too old to take advantage of a LISA, further thought highlighted real concerns. I'm all for anything that gets people into the habit of saving but I, along with many in the industry, am concerned that the LISA seriously risks undermining the success of auto-enrolment.
Given a choice, will young people choose to opt out of auto-enrolment and plump for the LISA? If time is taken to weigh up the pros and cons of both options then that's fair enough but I fear many will make the decision with little knowledge of issues such as the value of employer contributions or how tax relief works.
I'm all for anything that gets people into the habit of saving but I am concerned that the LISA seriously risks undermining the success of auto-enrolment.
Also, what will their LISA contributions go into? Will they be invested where they have the opportunity to grow or will they just go into cash? We all know how well cash has done in recent years!
We await more detail but it occurs to me that what we need here is not another product but more investment into education and the provision of guidance/advice services. That way we can help more people make informed decisions rather than introducing more complexity.
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