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The Actuary The magazine of the Institute & Faculty of Actuaries

Only 40% of people understand newly launched LISA

Despite 36% of British people considering saving for a house their top financial priority, 60% do not know what the lifetime individual savings account (LISA) has to offer.

LISAs designed for saving for first house ©iStock
LISAs designed for saving for first house ©iStock

That is according to research by Barnett Waddingham, released last week to coincide with the LISA launch, which suggests a financial knowledge shortfall in the UK.

It shows that 65% of British people admit to losing sleep over their finances, 79% want financial education in the workplace, and just 17% consider pensions a top priority – despite government communication initiatives.

“The challenge is that neither the workplace nor the workforce are in a position to rebalance affordability and aspiration,” Barnett Waddingham workplace health and wealth head, Damian Stancombe, said.

“Pensions are not a priority – employees can’t afford to save for retirement and employers are not doing enough or don't see the value in engaging the transient younger generations.

“In the future, this will put overwhelming pressure on the already uncertain State Pension.”

This lack of prioritising pensions has been a recurring theme for the last three years according to the Barnett and Waddingham research, which also shows that affordability is the reason for 65% not contributing more to a retirement pot.

In addition, 45% say that they would increase their contributions if they knew their peers were, while 40% have revealed they do not receive any help from their employer regarding financial concerns and goals.

“We need stronger messages from government and employers to educate individuals in the importance of staying in once auto-enrolled, investment decisions and contribution levels, and decision-making stages in later life on how to access pension savings in retirement,” Stancombe added.

This comes after research by Aegon earlier this year revealed 67% of millennials either do not understand the newly launched LISA, or have never heard of it, despite it being specifically designed to target their age group.

“Education and information is key, particularly as not everyone will seek financial advice when starting saving,” Aegon pensions director, Steven Cameron, said. “People clearly need to be informed of the options out there, but also which of these is likely to deliver the best outcomes for their needs.”

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