The firm said pension saving was still generally the best long-term option for both basic and higher rate taxpayers, though the relative tax efficiency of pensions and LISAs would depend on an individual’s tax status.
Pension savings that attract an employer matching contribution remained the best option for all, but Hymans Robertson urged everyone aged under 40 to open a LISA to provide increased savings flexibility through to age 50.
Partner Paul Waters said: “There’s real appetite from those under the age of 40 to invest in a LISA, but encouragingly people still recognise the benefits of pensions.
“This is good news as we need to move away from looking at pensions and LISAs as competing products. One should not be at the expense of the other.”
Waters said those considering ditching pension savings in favour of a LISA should think about what they wanted from long term savings and whether they needed flexibility.
“If your absolute goal is retirement saving, a pension is generally your best option,” he said.
“Many people will have other important priorities like saving for a house. Anything that gets people into the saving habit early on should be a good thing.”
Karen Brolly, Hymans Robertson’s head of life and financial services products, said that, for a while, Hargreaves Lansdown was the only firm set to offer a product at launch, but was now aware of offers from Skipton Building Society, Scottish Friendly, The Share Centre, One Family and Nutmeg among others.
Ms Brolly said: “Given the demand for LISAs, it’s not surprising more have entered the market. There is also good reason to expect that those insurers offering products early will be in a good position to become market leaders, as LISA money will probably prove to be ‘sticky’.
“In fact, we’re surprised more providers aren’t in the market, but we may see more enter over the coming months.”
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