Lifetime ISA: Government urged to clear “muddy waters”
31/03/2016
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”.
Need Financial Advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.
Share this..
Related stories
The Value of Financial Advice for Pension Funds
According to a report published by the Value of Advice Campaign, consumers who seek independent financial advice could provide themselves with a retirement income boost of more than £2,780 per year. This compares to a monthly increase of around £232 for the average consumer. The findings of the report established that there were two main reasons for this, including that those who seek pension...
Read MoreBT announces profits fall but pension fund concerns are greater
Despite announcing first-quarter figures which showed profits down 45%, it is the issue of BT's final salary pension scheme which is causing more concern amongst investors. This is the largest UK final salary scheme in existence and is currently said to be around £8 billion in deficit. Even though the figure of £8 billion may well have fallen after the recent run of the UK stock market, there ar...
Read MoreMore pensions advice needed, say Age Concern
More advice and greater awareness about pensions is needed to prevent more and more people from falling into the poverty trap when they retire, according to Age Concern, a charity aiming to promote the well-being and independence of older people and to prevent poverty in retirement. Research carried out by the Institute of Fiscal Studies on behalf of another charity, Help the Aged, indicated that...
Read MoreDoctors Threaten Further Action over Pension Reforms
The dispute between the Government and doctors in the UK seems to have escalated, with doctors calling for further industrial action to be taken over pension reforms. The implications of this could mean another day of skeleton service, similar to that practiced on Christmas Day, whereby there are only enough doctors on standby for emergencies. The possibility of this looked more likely after t...
Read More