CISI board member’s concerns over the harm Lifetime ISA may cause pensions
A CISI board director has expressed concerns that consumers may take up the new Lifetime ISA “without thinking about it”
Rebecca Taylor CFPTM Chartered FCSI fears that people may opt for George Osborne’s latest savings reform as an alternative to a company pension scheme.
The former IFP President said the absence of further tinkering with the pension allowances was notable in the Budget, but believes the Lifetime Isa is the first step to overhauling the pension system entirely to a tax exempt route.
She said: “We are concerned that people may not make the most sensible decision. ISAs are generally seen as trustworthy, whereas pensions are not. Owing to the bad press surrounding pensions, some consumers may opt for the Lifetime ISA without thinking about it, as an alternative to a company pension scheme.
“Those who receive financial planning advice will, as always, be the ones to benefit most, using a combination of all the available schemes for themselves and their immediate family. More than ever, advice is needed to help people make the best decision.”
Rebecca welcomed an increase to £500 in employer-funded advice, saying: “This will open up the possibility for financial planners to provide far more personal planning advice without the employee being taxed.”
The Lifetime ISA came under fire less than two hours after it was revealed.
Steven Cameron, a Pensions Director at CISI Corporate Member Aegon, said: “Although the chancellor ultimately resisted the introduction of a Pension ISA, the Budget shows how attached he has become to introducing a competitor for pensions in the form of the Lifetime ISA or LISA. Pitched at under 40s, it underlines his mantra of producing a budget for future generations.
“There is a huge risk that the LISA will encourage some under 40s to turn down the opportunity to be auto-enrolled into a workplace pension, even though that comes not only with the equivalent of a 25% government bonus on personal contributions, but also with an extremely valuable employer contribution.”
Read your next article on your device with the new MyCISI Member App
Available on App Store and Play Store
