LISA0042

Written evidence submitted by Anonymous

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

I would use the Lifetime ISA for a house purchase but there are two reasons why this is not feasible. Firstly, the £450,000 maximum property price is completely unrealistic in London. The max property price should be dependent on region and should be the average property price for that region. Secondly, there is no option for buying with a partner who is not a first-time buyer. This means there is no option to use the Lifetime ISA for a joint mortgage with my partner.

As a result, the amount saved in my Lifetime ISA will be restricted to a pension saving product.

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

I find the Lifetime ISA’s 25% bonus a huge incentive for saving for my pension. I have invested in my Lifetime ISA instead of other ISA products or private pension options because of this.

5. Should the Lifetime ISA be abolished?

Absolutely not. The Lifetime ISA is an excellent savings incentive for young people like me and has had significant take up from Millennials and Gen Z. But it does need reforming, to ensure it doesn’t penalise consumers.
 

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

I think the withdrawal penalty is a deterrent so removal of it altogether might not be the best solution. But the penalty should not cut into the consumer’s own savings amount, which at 25% it currently does.

Any reforms or abolishment made by the committee should also give consumers a one-off opportunity to withdraw the full amount of their Lifetime ISA, including any bonuses and interest accumulated.

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

Absolutely not. Workplace pensions rarely offer the same protection, incentives or transparency of a Lifetime ISA, and what happens if people leave employment for whatever reason? Citizens do not stay in the same job, line of work and/or working arrangement for 40 years. What happens if someone is in full-time work in their 20s and then switches to freelance work in their 30s? What if someone starts a business in their 30s with no workplace pension and then goes into full time work in their 40s? This is not unusual, nor should those who change their working arrangements over their working life be penalised by this. The Lifetime ISA should be a product available to all regardless of whether they have access to a workplace pension or not.

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

It should be removed, or alternatively raised in line with regional averages. House prices vary significantly across the country and this needs to be taken into account.

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

I would recommend that consumers of all ages should have the opportunity to save into a Lifetime ISA. Not everyone under 40 has the same experience and some people are only able to save in their later years.

January 2025