LISA0006

Written evidence submitted by Anonymous

Background:

The Treasury Committee is asking for evidence on whether the Lifetime Individual Savings Account (LISA) is still an appropriate financial product nine years after it was created.

Former Chancellor George Osborne introduced the LISA in the 2016 Budget, aiming to provide an alternative method of tax-free saving for retirement while simultaneously encouraging people under 40 to save for a property by offering incentives which could help people get on to the property ladder.

The product enables people under 40 to open a LISA, and to contribute up to £4,000 each year until they’re 50. At the end of each tax year, this is topped up by a 25% bonus from HMRC.

Individuals are only able to withdraw their money from the account if they are either buying their first home, terminally ill with less than 12 months to live or aged 60 and over. Withdrawal for any other reason comes with a 25% charge.

The Treasury Committee is aiming to gather views from the finance industry, consumers and experts. As part of this work, MPs are looking for answers to the following questions:

Introduction

This information is provided by myself as a consumer/user of the LISA scheme.

Response R (as Consumer) to questions raised 

1. Is the Lifetime ISA fit for purpose in its current design, including as a combined product for house purchase and pension saving?

 R: Yes, on balance, I believe it is. I invested last FY for the first time and plan to increase again this FY with the intention of using to buy a property in the near future.

2. How well do consumers transition between using the Lifetime ISA as a product for house purchase, to then a product for pension saving?

 R: Ive not yet made that transition. However, should the planned property purchase never materialise, I would consider it as part of my future pension. Ideally I would like the option to do other things with the money eg withdraw if needed, but otherwise the pension option is OK.

3. Given its policy purposes, is the Lifetime ISA value for money for the Government?

 N/A

4. Is the Lifetime ISA a suitable pension savings product?

 N/A

5. Should the Lifetime ISA be abolished?

 R: I don’t believe so otherwise it would discourage my property purchase and/or pension plans.

6. Should the Lifetime ISA be reformed to remove the withdrawal penalty?

 R: Yes, that would be helpful.

7. Should the Lifetime ISA be restricted to those with no access to a workplace pension?

R: I don’t see why such restrictions should apply.

8. Should the Lifetime ISA house price cap be raised in line with inflation, or removed?

 R: That’s unlikely to affect me but would be understandable.

9. Should the annual Lifetime ISA limit be raised from £4,000?

 R: Yes, that could/would encourage me to invest more.

10. Should the Lifetime ISA be reformed in any other way?

R: I can’t think of other options.

January 2025