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LISA expected to cause confusion


The Lifetime ISA (LISA) is designed to allow people to save for their first home, or for retirement

Many businesses expect the introduction of the Lifetime ISA (LISA) to cause confusion among employees saving for retirement, according to research from Close Brothers.

The Close Brothers Business Barometer found that 39% of the 900 UK employers surveyed expect the LISA to confuse employees.

The LISA, launched in April 2017, is designed to either allow people to save for their first home or to put money away for retirement. A saver is able to deposit up to £4,000 every year, and receive a government bonus of 25%.

Tim Gosling, policy lead for DC pensions at the Pensions and Lifetime Savings Association, told HR magazine that financial education and scheme design will be key. “Financial education in the workplace is an effective tool when employers use it in combination with the design of their scheme,” he said. “Often employers use education to help employees make choices, but they can also use it to reinforce or guide behaviour that’s incentivised by scheme design. For example, it may work well to encourage employees to take advantage of the full employer match, working together with the design of contribution structures.”

Jeanette Makings, head of financial education at Close Brothers, said that in the current economic climate, with a rising state pension age and house prices remaining out of reach for many, any initiatives that encourage a savings plan should be welcomed. “The introduction of the LISA may help engage more young people in starting their savings journey, but it is another choice and with choice comes confusion and possible missed opportunities or poor decision-making,” she said.

“With pensions, share schemes and ISAs in the workplace and other non-workplace investments the financial landscape is more complex than ever to navigate. Saving schemes are not a ‘one size fits all’ and employers have a pivotal role in ensuring staff are equipped with the tools and support to improve their understanding and make the best savings choices for them whatever their age, career stage and personal circumstances.”