We welcome the launch of the Lifetime Isa (Lisa) as a bid to get
younger people more engaged in savings.
The government has put a significant amount of money behind the
incentives for the product, and this alone sends a huge signal
about the need to save.
However, although we are supportive of any move to encourage
younger savers, we must note a potential danger that much publicity
around the product could lead to a misunderstanding that a Lisa
alone is 'enough'. We would urge the government and financial
services sector to continually make clear the scope of this product
so it does not lead to a generation believing they are prepared for
their retirement solely on their Lisa savings.
The launch of the Lisa is also a reminder of the importance of
financial advice. Employees who qualify for the product will need
to know about how the Lisa can fit in with their workplace pension,
and how to avoid missing out on employer contributions.
Additionally, as the FCA has previously noted as a concern,
consumers could have difficulty deciding whether a Lisa is the best
product for them and weighing up the pros and cons of it against a
pension or Isa without advice.
Not only that, but when Lisa savers reach the age of 50, they
will face a big decision over their savings plans because they will
no longer be able to pay into their Lisa.
All this adds up to an overwhelming need for guidance and high
quality professional advice around saving. Last month, John
Cridland proposed a mid-life financial MOT for all workers, and now
this month we are seeing the launch of the Lisa.
This is a great opportunity for the government to join up its
savings policy, and introduce a sound system of guidance and advice
for consumers alongside the great incentives for the Lisa.