Three in five (61%) savers would consider opening a Lifetime ISA (LISA), with 37% doing so immediately upon its launch, a survey by Hymans Robertson reveals.
Meanwhile, over a third of respondents (37%) said they would put more money into their LISA than their pensions, when the product is introduced next April.
The LISA allows savers to put aside up to £4,000 a year tax-free and receive a 25% top-up from the government. Savers can then only use their savings to pay for the purchase of a new home or for retirement, without incurring a fee.
However, the findings will also back up concerns that the policy will impact on savings made into pension schemes.
Almost a fifth (18%) of respondents who said they would consider opening a LISA also said they would not save into a pension at the same time. Another 19% said they would save into both the LISA and a pension, although contributions to the LISA would be higher.
Just over a third (34%) of those who said they wouldn’t consider opening a LISA said their decision was due to their preference to save with a pension. However, more people (41%) cited the LISA’s lack of flexibility and its early exit penalty.
A Treasury impact assessment on the policy, published 17 October, said 800,000 people would have adopted the LISA by 2021, and assumes many new savers will opt for the LISA over a pension.
Hymans Robertson partner Paul Waters said, however, the industry should welcome that 49% of people plan to save into both LISA and a pension, with higher contributions being paid into the pension.
“We need to move away from looking at pensions and LISAs as competing products,” he said. “One should not be at the expense of the other. Younger workers don’t see them as an ‘either/or’ decision. They see them as a product that could give a boost to their savings.
“But they also appreciate the boost to savings you get through employer matching contributions in workplace savings. This is supported by the fact that most of those who would open a LISA would still save more to their pension.
“There is a growing disparity in wealth between the generations. Anything that gets younger people into the savings habit should be viewed as a positive.”
Pensions minister Richard Harrington has also dismissed concerns that the LISA will impact the take-up of workplace pensions. Speaking to PP, he said LISA “seems like a good product, but it’s not an either/or product”.
The main attraction of the LISA, according to the survey, is the government bonus, with 57% of respondents referring to it. Another 36% cited the flexibility of being able to use the savings vehicle to fund a home purchase.
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