/ LIFETIME ISA / money into the LISA , save up for the next lifetime event , for example , getting married , moving to a big home , withdrawing some of the money for that lifetime event and then continuing to save again .”
However , Nicol points out this flexibility would inevitably result in less money being saved for old age , which was the point of the Lifetime ISA in the first place . Therefore , he thinks the government may be better off improving the terms of current pension schemes .
“ Pensions have the big advantage that for many , an employer contribution boosts the savings pot far more than the bonus offered on the Lifetime ISA ,” he continues . “ Pensions , unlike the Lifetime ISA , cannot be accessed at any time ; this is both their weakness as an attractive savings vehicle and their greatest
Source : HM Treasury strength as a retirement plan .”
“ If longer term auto-enrolment take-up rates prove disappointing , the government should consider compulsory membership and certainly should steadily raise employer and employee contributions until they reach realistic levels .”
MOVING THE GOALPOSTS Aside from the lack of flexibility around pensions , the biggest
TRANSFERRING FUNDS FROM THE HELP TO BUY ISA TO THE LIFETIME ISA IN 2017-18
Help to Buy ISA
Balance of savings made after 5 April 2017
Balance of savings made before 5 April 2017
Lifetime ISA contributions
Transferred balance of Help to Buy ISA savings made after April 2017
Transferred balance of Help to Buy ISA savings made before 5 April 2017
“ Implementation of the Lifetime ISA has been a botched affair by the government ”
Lifetime ISA
£ 4,000 annual Lifetime ISA allowance
Does not count towards £ 4,000 annual Lifetime ISA allowance
25 % government bonus on total amount complaints about these products surround “ the moving of the goalposts ”. Ever since the 1670s when the first organised pension scheme was introduced for Royal Navy Officers , the government has been unable to resist tinkering with the rules – no more so than in the past 20 years .
For example , Gordon Brown ’ s “ pensions raid ” in 1997 abolished the tax relief pension funds earned on dividends from stock market investment , spelling the beginning of the end for defined benefit schemes in the private sector .
Defined contribution schemes haven ’ t been immune to government tinkering either . The annual allowance , meaning the amount you are allowed to contribute to your pension pot each year before it is taxed , has fallen by 83.33 per cent over the past 10 years , from £ 215,000 in 2006 / 07 to £ 40,000 in 2016 / 2017 , while the lifetime allowance has fallen from £ 1.5m to £ 1m over the same period .
However , Nicol says the Lifetime ISA is unlikely to see the same fate .
“ Governments can change complicated pension rules safe in the knowledge that they will largely escape the attention of those not immediately affected ,” he explains .
“ It will be politically much trickier to tinker with the well understood and loved ISA . Although what was once one simpler ISA now has half a dozen hybrids , so the danger must be that the new ISA types will come and go with the politicians who think them up .”•
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