Lifetime ISA: Government urged to clear “muddy waters”
The Chancellor has been told to urgently establish an independent pensions review after confusion over the role the Lifetime ISA has in pension savings has “muddied the waters”.
Scottish National Party MP, Ian Blackman, called for the Tories to provide more information to savers about employer contributions and the potential dangers to retirement savings that sacrificing a workplace pension scheme for the Lifetime ISA could present.
Blackford raised the concern that he feels that the introduction of the Lifetime ISA takes some attention away from the need to save enough for a secure retirement income, after NOW: Pensions released figures related to consumer attitudes towards the Lifetime ISA.
The pension provider surveyed more than 700 people between the ages of 18 and 39, and revealed that around 33 per cent planned to save with a combination of the ISA and a workplace pension. However, information from the survey also indicated that sacrificing workplace pension contributions for ISA savings could leave pensioners with a much reduced savings pot come retirement. NOW: Pensions said that saving £20 a month into a workplace pension a year would return £600, while the same amount in a Lifetime ISA would amount to only £300.
Mr Blackford said: “A pension is a deferred income but an ISA is something completely different entirely and it is vital that savers are equipped with all the facts so that they aren’t dazzled by the Chancellor’s new ploy.
“Pension savings benefit from tax relief, and, typically employer contributions but the new Lifetime ISA does not.
“A pension should provide a secure, deferred income for later in life so it is vital that we have a system that is simple and protects savers rather than adding another layer of confusion.
“George Osborne’s new Lifetime ISA is another attempt to muddy the waters when it comes to pensions”.
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