Stewart Hastie, Pensions Partner, KPMG UK comments on the introduction of the new Lifetime ISA.
Marking of the introduction of the new Lifetime ISA (LISA), KPMG welcomes the new product but explains that it should not be to the detriment of pension saving.
“A KPMG survey* suggests a third of employers plan to introduce LISA as part of a broader savings package. With levels of UK consumer savings diabolically low, the more flexible and tax efficient products employers can offer the better.
“For many, thinking about retirement is a secondary concern and getting on the property ladder is a much greater incentive to save. With a LISA aspiring homeowners can boost savings by up to £1000 for every £4000 saved each year. That means someone saving £4,000 a year towards a 10 per cent deposit on a house worth £207,000** would be able to buy a year earlier than they could otherwise.
“However, retirement saving needs to remain a priority. If an individual is giving up valuable employer contributions to a pension in order to save in a LISA that could cause problems for the individual, employers and the state down the line.
“With careful design and communications, employees can benefit from both Lifetime ISAs and workplace pensions saving."
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* A KPMG survey of over 100 pensions and reward professionals attending the PBUK conference in H2 2016.
** The average UK house price according to March's Nationwide’s House Price Index.
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Notes to Editors:
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff. The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.