Lifetime Isa: the last dose of George’s Marvellous Medicine for the pensions industry
Reports of the death of the Lifetime Isa are greatly exaggerated. But with a string of life companies coming out this month to say they couldn’t possibly be ready to launch a Lisa product by next April, and Lisa’s champions George Osborne and Ros Altmann both gone, the odds aren’t looking good.
Right now Lisa’s chances are on a par with those of a unicyclist in the Olympic keirin. Or whatever that Tron-like cycle race the Brits always win is called.
Which is a crying shame. And given that a recent poll found that two thirds of employers feel their staff would prefer a Lisa to a workplace pension, it’s another example of clients getting what the pensions industry wants to give them rather than what they want.
True, the government’s plans for Lisa always were a bit hazy. Critics portrayed it as more needless tinkering with the pensions system and another glib political catchphrase.
But Lisa didn’t deserve to go the same way as the Northern Powerhouse and the Big Society. Remember that? Few do.
But even if Lisa is stillborn, there are lessons to be learned and an opportunity to be seized.
The first is that if you talk to young people about retirement saving without mentioning the ‘p word’, you get a very different reaction.
A white paper published in June by the investment firm True Potential found that people aged 25-40 would be twice as likely to save into a Lisa than into a pension.
Saving yes, “pensions” no
Pensions clearly have an image problem among the under 40s. Younger people associate the word pension with old age, frailty and wrinkles. And where’s the aspiration in that?
So it’s no surprise that most under 40s, including many professionals, tend to bury their heads in the sand and ignore retirement planning for as long as possible.
But it’s wrong to think of 20-somethings as a feckless bunch with no interest in saving for later life. It’s just that they have so many other things to save for first – a car, a house, childcare, school fees.
Pensions feel very remote for most people at that stage in their lives. But as Lisa’s popularity showed, younger people are much more receptive to the idea of a lifetime saving product.
So the pensions industry should take note – there is a rich seam of demand to be tapped there. But it’s demand for a product that doesn’t yet exist: a truly flexible, tax efficient, lifetime savings account.
Inspiration from across the Pond
