LISA0076

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?

As a student, the idea behind a lifetime ISA works well but I believe some reforms are needed.

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 am not sure about this as currently I am focusing on using it in order to purchase my first home.

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

Government needs to help first time buyers and those on pensions, this is a good scheme which can allow people to save up more effectively for important purchases.

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

N/A

5. Should the Lifetime ISA be abolished?

No but if could be split into two different schemes, one for first timer buyers and another for pensions. 

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

The penalty is harsh. However, the 25% top up is so people can use the money for a particular bonus, removing the penalty undermines the purpose of the ISA.

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

N/A

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

This is the biggest issue. First, this does not take into account the regional variation in house prices. For example, the average home price in London is £685,000 so the current cap is just unrealistic for first time buyers. Instead, a regional approach should be considered. This would mean that those living in urban areas get effectively the same value as those elsewhere, instead of being penalised after saving for many years.

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

It should be raised and a regional approach must be considered. The current system is unsustainable and simply unrealistic for those living in cities. 

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

If the government, doesn’t remove the cap or alter it to a regional approach, the lifetime ISA will eventually become unfit for purpose. 

January 2025