• March 28, 2024
 Young people opt for LISA over pensions

Young people opt for LISA over pensions

For the younger generation, auto enrolling into a workplace pension has fallen from favour when it comes to retirement savings, as over a quarter of millennials surveyed believed the Lifetime Isa (LISA) was the more tax efficient option.

Although half of the 22 to 36 year olds asked had not heard of or did not know the purpose of the Lifetime Isa, the research from pensions technology firm Dunstan Thomas indicated that 25%  might still save in to one.

Whilst 38% did not know whether the auto enrolment pension or the LISA would be most advantageous in terms of tax, 27% believed that the LISA would be the best option.

Commenting on the figures, Dunstan Thomas stated: “In view of these findings the scope for misbuying or misselling looks significant.”

Due to go live in three months, the LISA applies to those under 40 and offers a 25% annual government bonus.

The funds are designed to fund a first home deposit or to save for retirement, but be taken out during a terminal illness. If they are taken out for any other reason, a charge of 25% will apply.

This charge is assessed on the total funds within the LISA, resulting in savers potentially getting back less than they originally put in.

Employers will also have to add a minimum of 3% to April 2019, in addition to the 5% minimum staff contribution required under auto-enrolment.

Currently, this is 1% on top of the 1% from staff.

Georgia Owen

Georgia is the Senior Content Executive and will be your primary contact when submitting your latest news. While studying for an LLB at the University of Liverpool, Georgia gained experience working within retail, as well as social media management. She later went on to work for a local newspaper, before starting at Today’s Wills and Probate.