LISA0171

Written evidence submitted by Anonymous

Hello.

I am a female individual, aged 42, who has a lifetime ISA.

I would appreciate my name not being published due to extended family circumstances please.

I think the LISA is an excellent product and would have used it for purchasing my first house, should it have been available in the years before my husband and I bought our first home. I now however enjoy using the product as a method of saving towards retirement. It has made me more aware of saving for retirement, encouraged me to learn about investing and has been hugely beneficial to my husband and I who are self employed and do not benefit from an employer match.

Please do not abolish the lifetime ISA.

On hearing about the review, I sent the following email to Dame Hillier.

( Name removed in case of publication)

Dear Dame Hillier

I am writing regarding the news that you are reviewing the lifetime ISA.

As a self employed person I really love the LISA and greatly appreciate the product as an additional way of saving towards retirement. It is a very good product that has helped me start to save towards retirement, which is not easy when you are self employed (my husband is also self employed so our little family will never benefit from employer matched pensions).

I am writing to ask if you could please please consider allowing people like myself to continue contributing to the LISA after aged 50 even if we are not allowed the additional government bonus anymore, as it is very disheartening thinking that in a few years I will not be able to contribute anymore and then have to just hope the markets or interest bear some fruit to add to the LISA, rather than being able to actively put more away myself.

Currently I am 42 and whilst I also contribute to a SIPP it would be a fantastic amendment to be allowed to keep up my small contributions into the same account after 50. It would be amazing if perhaps the bonus was added for self employed people or those without employer pensions. This would be so helpful as of course we are trying really really hard to ensure we are not any burden to the state in our later years.

Please consider allowing contributions after 50 even if they are not matched with the government bonus or only have the bonus for those without employer matching.

Thank you so much.

Best wishes for the New Year

In regards to the questions you pose at the inquiry:

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

I think it is an excellent product which focuses on big lifetime financial events which helps you focus on major milestones. As a female from a working class background it has been an amazing product to help me become more educated about saving and investing through the motivational government bonus available. It should be better advertised for young people to start early and rules could be adjusted to allow more older people to take up the LISA. It would be better if contributions could be kept up over aged 50 and as the lifetime ISA is a relatively new product, this would be an ideal time to adjust rules to allow over 50’s to continue contributing.

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 did not have the opportunity to use the LISA for our first house purchase due to my age but if it had been available I believe it would have been very easy as it's a great product that builds positive savings and investing habits.

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

I believe it offers good value for the government as a combined product meaning there is less admin, as there is one account set up for both saving for a house and then for retirement savings. Overall being motivated to be more self sufficient in retirement will help the government long term have less people reliant on benefits. Encouraging home ownership through the bonus ensures that those who wish to own a home have some help and it is much better than help to buy schemes as it poses less risk for the government.

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

I think it's a fantastic product, I love that it's part of the ISA family and that the access age is slightly older than for SIPP products, meaning my savings are locked away in staggered age groups. It is a great complementary product to a SIPP however I believe it would be good for the government to consider allowing savings into the LISA after the age of 50. This could even be without the government bonus or keeping the government bonus after age 50 for those who do not receive any employer match. You could also just allow everyone of every age up to 60 to have a LISA to encourage saving and lessen the burden to the state.

5. Should the Lifetime ISA be abolished?

Definitely not! It is a brilliant product that ought to be advertised much more to encourage people to save for major financial milestones from a young age. Schools, colleges and universities should inform young people about the LISA so that people start saving young and are then less of a burden to the state in their older years. Parents could perhaps be allowed to open a LISA for their children.

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

I think the withdrawal penalty is fine. It encourages you to keep the money in the account for the designated purposes. Perhaps providers could add a tick box when people make contributions to remind them that contributions are for retirement or home purchase only.

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

I would be fine with this as a self employed person, but it could lead to less market choice and less products being available as companies would not be so motivated to offer a product that has a limited audience so overall it seems better to keep it as it is.

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

Yes, why not? There is no real reason to limit the ambitions of first time buyers. Let people be ambitious, work hard and save. If the LISA could be opened by parents as soon as a child is born then people would have better focus on securing their future. Even if the limit is lifted for house prices there is still the yearly limit of what you can contribute so just let people buy whatever house they can manage to save for.

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

I do think this should be raised periodically and those saving for retirement should have a higher limit, especially those with no employer match. Perhaps once people have bought their first home or if the account is for retirement, people could tick a box to say the account is now for retirement savings and opt out of the option for saving for a house (or taking the money out for a house)  and have a higher limit for retirement savings. Please allow us to contribute after aged 50, especially those of us with no employer match in a pension. I understand this is a complicated addition so please consider all options for continuing contributions between aged 50-60. Whilst this review is ongoing the majority of customers should be under aged 50 still so this is an ideal time to make this adjustment and would positively impact people.

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

I think the main ways are:

Consider allowing contributions after 50, especially for those with no employer matched pension. This is the ideal time to make this adjustment as the product is quite new and people who opened it under aged 40 will not have reached 50 yet.

• Consider a higher paying in limit for those saving for retirement.

• Greater advertising - more awareness to lessen the burden on the state in later life.

• Consider allowing parents to open a LISA for children to create a nation of ambitious savers.

• Consider allowing older people to have a LISA as well. Many people who are in their late thirties and early forties have not bought a house yet so why limit the LISA to under forties?

• Perhaps consider a LISA for everyone - people in their forties and fifties would benefit from a great product and would be highly motivated to save more for a home or retirement, therefore taking pressure off the government in years to come.

• Consider adding an option to use LISA funds to clear government student loan debt after a certain age. Many people wish to be out of debt but it is hard to repay your student loans.

• Why not make the LISA a truly lifetime product and build a nation of ambitious savers by making it available to everyone without the discrimination of age based assumptions, founded on past stereotypes of where someone ‘should’ be in their house purchase and retirement savings journey. The housing market and mortgage market are very different to the past so perhaps changing the ages for the lifetime ISA now would be appropriate.

• The government could consider an NS&I LISA product which ultimately benefits the treasury, or perks within the LISA for those investing in major investments in Britain or start up companies here in the UK.

• You could consider creating a relevant and regular consulting group consisting of individual investors and industry representatives to continually improve products and suggest ways to update products so that products keep up to date with consumer demand

• Consider allowing higher contributions for those with below median or medium incomes to help those who may not have other financial assistance with major financial milestones.

February 2025