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Money Observer: What other savings events should qualify for the new Lifetime Isa?

young-couple-saving-with-piggy-bank_0TISA, the financial services membership association, is calling for industry professionals and the general public to have their say on which additional lifetime events should be included in the Lifetime Isa (Lisa).

The new Isa, set to launch in April 2017, offers a generous government bonus, of 25 per cent, for certain lifetime events.

The bonus, which is capped at a maximum of £1,000 a year, can be utilised by first-time property buyers and those who use the Isa as a retirement savings vehicle. The government bonus also applies to terminal illnesses.

Those who wish to withdraw their savings for any other reason before they turn 60 will lose the government bonus and any interest or growth on this. They will also be hit with a ‘withdrawal charge’, of 5 per cent.

HAVE YOUR SAY

When the new Isa was first announced, during March’s Budget, the government said it was open to the idea of adding further lifetime events to qualify for the bonus.

In light of this, TISA has launched a survey for people to vote on the three lifetime events they think the government should include. The findings will be announced on 27 June and proposed to the Treasury for future implementation. If you’re interested you can vote here.

In the survey the lifetime events the public have been asked to vote on include moving to a bigger home, redundancy, setting up a self-employed business, children’s education, parents’ nursing care fees, private medical treatment, getting married or funeral costs for a relative.

People can also state their views about whether the 5 per cent withdrawal charge should be dropped.

There is also a blank option where people can add another lifetime event of their choosing. Including a blank option in a survey like this one means ‘we could end up with something like Boaty McBoatFace’, says Adrian Boulding, strategy director at TISA Policy.

But ultimately, TISA is ‘concerned with evidence-based research and keen to tell the government what people think, rather than what TISA thinks’.

MOVING UP THE PROPERTY LADDER

Boulding’s personal view is that moving up the housing ladder into a second home should be included. ‘If we don’t help young people move into bigger homes and have families, we will end up with a whole generation of people living in studio flats,’ he says.

‘TISA is conducting this survey as we feel it is important for everyone to have their say on what other significant lifetime events should be included in the design of the Lisa,’ says Boulding.

He argues that it is already a much-needed incentive for those who currently find it hard to save to consider doing so. There is much scope for the Lisa to enable individuals to save as much or as little as they wish each month, giving them greater control their finances, he adds.

‘We see this as an opportunity for the government to provide people with more choice and more flexibility.

‘We are looking forward to as many people as possible being involved and having their say to what lifetime events should be included in the Lisa. We will continue to work closely with the government, industry and trade bodies in the consultation around this policy.’

This article was originally published in Money Observer on 9 May 2016: http://www.moneyobserver.com/news/09-05-2016/lifetime-isa-what-other-savings-events-should-qualify-new-isa

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This entry was posted on May 9, 2016 by in Uncategorized.

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