LISA0168

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?

No. I have 3 children, now aged 28-21.

All opened Help to Buy ISAs with our encouragement.

Eldest moved hers into LISA to save more when they were introduced. After saving for past 4 years, despite high London rents, she and partner (both front line blue light roles) are unable to use their respective LISAs as flat is costing £525k. Moving further out from London is not an option as shift work needs they need public transport options that run all night. They will not only lose any benefit of using this so called 'encouragement to save', but will also be penalised so that they lose over 6% of their own savings, never mind the inflation erosion. They have employer pensions so the prospect of leaving the money for a pension scheme, with no tax advantage is of no attraction, not least as they desperately need any possible money now. This is a travesty and betrayal of our young people.

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

 Most people choose one or the other. Neither option is now attractive, as the goalposts changed since introduction. Many workers are not interested in this kind of pension product. It is not as good as an employer pension, and allows less control and flexibility than a SIPP.

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

Don’t know, but sincerely doubt it. But no good for the public.

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

 Definitely not. Amounts far too low. Not tax efficient. Inflexible as people’s careers develop.

5. Should the Lifetime ISA be abolished?

 Yes. I believe it is almost a mis-selling of a product!

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

 Yes. See my examples of real-life experiences in section 1. Why penalise those who do the right thing and save! Shame on government for doing this and not responding sooner when highlighted by consumer voices such as Martin Lewis.

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

 No. But they too deserve a better more transparent and flexible product. And not linked to possible using it for house purchase.

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

 Yes. And for those unfortunate enough to have taken this product out. And those who have paid the penalty should be entitled to reclaim their personal deduction.

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

 Well of course. Don’t you want the amount to be worth having? It should be in line with other pension allowances to save.

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

A new product should be developed to suit those wanting to save for pension. And totally different savings for those for houses as first time buyers.

February 2025