4 February 2025
If you are covering the close of the Treasury Committee’s call for evidence regarding the Lifetime Individual Savings Account’s (LISA) appropriateness, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:
"Today marks the deadline for submissions to the Treasury Committee on the future of the Lifetime ISA. It’s clear that the product is failing to deliver as intended. From our experience with clients, we regularly see confusion over its dual-purpose design, which tries to combine retirement saving with support for first-time homebuyers. This lack of clarity undermines its effectiveness, leaving many consumers unsure how best to use it.
"The Lifetime ISA is far better suited as a ‘First Homes Account’. Repositioning it this way would focus its purpose on helping people save for their first property, while removing the confusion around its role as a retirement savings vehicle. For those looking to save for retirement, existing workplace pensions and personal pensions are much more effective, structured, and tax-efficient options.
"The product is further hampered by an excessive 25% withdrawal penalty, which unfairly reduces savers’ contributions alongside reclaiming the government bonus. Reducing this penalty would make the product fairer and more accessible, especially for those who face financial emergencies.
"Finally, the current age cap of 39 is outdated given that first-time buyers now average 34 years old, with Londoners typically even older. Combined with the fixed £450,000 property price cap, which no longer reflects today’s housing market, it’s clear that the Lifetime ISA needs significant reform to remain relevant and supportive for those it was designed to help.
"The product as a whole should not be scrapped, but its scope should be narrowed so that it is better understood and utilised."
