LISA0051

Written evidence submitted by Anonymous

Introduction

My son is a self-employed carpenter, he has no personal private provision. At age 37 in 2018 he started a LISA as a vehicle to provide some pension provision. He has a stocks and share LISA with Hargreaves Landsdown and each year he has put in the maximum £4,000 contribution.

In round terms the figures are:-

Son’s contribution:- £32,000

Government contribution :- £8,000

Growth in value of funds held:- £17,000

Total LISA Value:- £57,000

Whilst this growth figure is good the projected size of the LISA at 60 is unlikely to be enough given that our son is now 44 and can only contribute for another six years.

 

  1. Is the Lifetime ISA fit for purpose in its current design, including as a combined product for house purchase and pension saving? The LISA as introduced is a good start but it is no longer fit for purpose given inflation.

 

  1. How well do consumers transition between using the Lifetime ISA as a product for house purchase, to then a product for pension saving? Not applicable

 

  1. Given its policy purposes, is the Lifetime ISA value for money for the Government? Yes, if effective it should provide a private pension for our son making him less reliant on the state for benefits in old age.

 

  1. Is the Lifetime ISA a suitable pension savings product? No longer, because it just hasn’t kept up with earnings and inflation.

 

  1. Should the Lifetime ISA be abolished? Absolutely not. It provides a very simple mechanism for pension provision for self-employed people.

 

  1. Should the Lifetime ISA be reformed to remove the withdrawal penalty? Perhaps not withdraw the penalty 100% but rather modify it so that it is not so draconian. Sometimes people’s plans for pension provision get blown off course by life events meaning that early withdrawal may be unavoidable.

 

  1. Should the Lifetime ISA be restricted to those with no access to a workplace pension? Again No; many workplace pensions outside the public sector are not contributing enough to provide a good enough result. The LISA provides a very simple mechanism for workers to top up workplace provisions.

 

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

 

  1. Should the annual Lifetime ISA limit be raised from £4,000? Yes it should be index linked to inflation and the allowance should be on top of the standard ISA £20,000 allowance.

 

  1. Should the Lifetime ISA be reformed in any other way? Yes in two ways; contributions should be allowed until age 55 not just 50 and no penalty withdrawals should be allowed from age 55 just like other forms of pension.

 

January 2025