LISA0038
Written evidence submitted by Anonymous
As both a stage 4 pancreatic cancer patient and survivor, I encountered a significant barrier when attempting to access the Lifetime ISA that I believe requires urgent attention. I raised this issue with my MP, xxx xxxxxxxxxxxx, who diligently brought my concerns to xxx xxxxxxxxx, xxxxxxxxxxxxx xxxxxxxxxxxx xx xxx xxxxxxxxx. However, the Minister's response dated 13th June 2024 was dismissive and completely failed to address the serious challenges I faced (and had requested his help in correcting) when dealing with the Lifetime ISA. In fact, the Minister insultingly by way of his final response inexplicably provided me with a copy of the rules for Lifetime ISAs when clearly I had been familiar with these and was raising an issue with them, rather than wondering what they were. I therefore hope this Select Committee will have the ability to recognise the problem and recommend amendment to fix it.
1. Is the Lifetime ISA fit for purpose in its current design, including as a combined product for house purchase and pension saving?
The Lifetime ISA is not fit for purpose in its current design, particularly regarding penalty-free access for individuals with terminal conditions. My personal experience as someone with stage 4 pancreatic cancer illustrates several critical flaws in the system:
● The current rules require physicians to certify that a patient has less than 12 months to live - an insensitive and unrealistic requirement given the uncertainty inherent in terminal diagnoses
● This creates an unnecessary divergence from the Department for Work and Pensions' Special Rules (SR1) process, which more appropriately uses the phrase "would not be surprised if the patient died within the next 12 months"
● The SR1 process is also more sensitive to patients, as the form goes directly to the DWP rather than through the patient's hands
● Even with my oncologist submitting the required documentation to my provider (Hargreaves Lansdowne), I received no acknowledgment of receipt
● The lack of clear communication and tracking creates additional stress for terminally ill patients who are already managing complex medical care.
● A streamlined process that accepts SR1 documentation or accepts evidence that you are receiving weekly rather than monthly payments for your PIP or other benefits would reduce bureaucracy, show greater empathy for patients' circumstances, and eliminate redundant paperwork for medical professionals.
● The current system only allows lump sum withdrawals, failing to recognize that terminal diagnoses often result in:
○ Dramatically increased monthly expenses
○ Significantly reduced monthly income
● Providers should be required to offer the same flexible withdrawal options available with standard ISAs, including regular monthly income payments
These systemic issues have effectively prevented me from accessing my own savings when I most need them. The contrast between the LISA's rigid requirements and the more pragmatic DWP approach demonstrates a clear need for reform. A streamlined process that accepts SR1 documentation would reduce bureaucracy, show greater empathy for patients' circumstances, and eliminate redundant paperwork for medical professionals.
Most critically, the system must recognize that individuals facing terminal diagnoses need simplified access to their savings and flexible withdrawal options to manage their changing financial circumstances. The current design fails to meet these fundamental needs.
2. How well do consumers transition between using the Lifetime ISA as a product for house purchase, to then a product for pension saving?
I do not see this as a transition product. The Lifetime ISA money is accessible, or ought to be, in a way which a pension is not. They are separate products.
3. Given its policy purposes, is the Lifetime ISA value for money for the Government?
So many people have no savings, this product encourages and incentivises savings. We need people in this country to have more savings and not less. Anybody who has Lifetime ISAs basically would be prevented from claiming benefits until this is all used up to a certain level, so that saves the government money because those claims would not be accepted until the savings are used up.
4. Is the Lifetime ISA a suitable pension savings product?
It can work well as a retirement saving vehicle.
5. Should the Lifetime ISA be abolished?
No.
6. Should the Lifetime ISA be reformed to remove the withdrawal penalty?
It should be reformed with regard to requirements for terminal illness withdrawal as it is a complete shambles currently (see above in 1 or below in 10).
It is bizarre that the 25% withdrawal charge for non-qualifying withdrawals is punitive and exceeds the government bonus, effectively penalizing savers' own contributions
7. Should the Lifetime ISA be restricted to those with no access to a workplace pension?
No. More unnecessary micromanagement and bureaucracy. The primary aim should be to get people to save more in both!
8. Should the Lifetime ISA house price cap be raised in line with inflation, or removed?
Yes any government threshold should be adjusted with inflation.
9. Should the annual Lifetime ISA limit be raised from £4,000?
£4000 is not a meaningful amount of money so it doesn’t really help with saving for a house and doesn’t help people who have one good year where they might be able to save more. However, the money I’ve saved in my Lifetime ISA has not actually helped me because I haven’t been able to access it.
10. Should the Lifetime ISA be reformed in any other way?
Terminal Illness Access (Personal Experience)
● The current rules require physicians to certify that a patient has less than 12 months to live - an insensitive and unrealistic requirement given the uncertainty inherent in terminal diagnoses
● This creates an unnecessary divergence from the Department for Work and Pensions' Special Rules (SR1) process, which more appropriately uses the phrase "would not be surprised if the patient died within the next 12 months"
● The SR1 process is also more sensitive to patients, as the form goes directly to the DWP rather than through the patient's hands
Administrative Barriers in Terminal Cases
● Even with my oncologist submitting the required documentation to my provider (Hargreaves Lansdowne), I received no acknowledgment of receipt, and have still not been able to access the funds so that the monthly income was paid out, and understand I will not be able to do so but would have to provide the same form each time (albeit without the doctors note again).
● The lack of clear communication and tracking creates additional stress for terminally ill patients who are already managing complex medical care
Inflexible Withdrawal Options
● The current system only allows lump sum withdrawals, failing to recognize that terminal diagnoses often result in:
○ Dramatically increased monthly expenses
○ Significantly reduced monthly income
● Providers should be required to offer the same flexible withdrawal options available with standard ISAs, including regular monthly income payments
Additional Reforms
● Age Restrictions: The current age limit of 40 for opening a LISA excludes many who could benefit from retirement saving incentives, particularly career changers and those returning to work after caring responsibilities
January 2025