ECONOMIC OUTLOOK | Pensions
Can Lisa ( with an S ) Hit the High Notes ?
Will the Lifetime ISA be a hit or a miss ? Tony Lloyd voices his concerns
The song “ LIZA with a Z ” may have been a huge hit for Liza Minnelli back in the 70s but whether the Lifetime ISA – “ LISA with an S ” – will be a hit or a miss is far from certain .
The LISA was first announced in the Budget last March and launched at the beginning of the new tax year in April . With a LISA you can save up to £ 4,000 a year with the State adding a 25 % bonus on top . You must be aged 18 or over , but under the age 40 when you open one , and you can contribute up until you are 50 .
It follows therefore that you could earn up to a maximum of £ 32,000 in bonuses if you open one on your 18th birthday and contribute the maximum £ 4,000 each year until you are 50 . A sizeable incentive which should be sufficient to attract the most negative of savers .
You have two options with the LISA , the first is for first-time buyers to use it towards the purchase of their own home which can be done at any time , the second is to use it to fund retirement from the age of 60 . Like all the ISA products the proceeds are tax-free when you realise your investment .
For a first-time buyer you would be foolish not to use a LISA as , with its cousin the Help to Buy ISA , there is no other scheme that comes remotely close to matching the benefits . To be frank even if you ’ ve only an inkling you may buy a home , it ’ s worth starting as it would give you a head start on saving for retirement should you not use it for home purchase .
The decision to use this as a vehicle for pension savings is not so straightforward and there is no definitive answer . R dofonline . co . uk DIRECTOR OF FINANCE 39