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05

Four in 10 employers to consider lifetime ISAs

Open-access content 9th May 2016

Some 42% of UK employers are considering introducing a lifetime ISA (LISA) into their remuneration package, according to research by Sackers.


The law firm says this could mark a "turning point" in how people save during their working lives as those under 40 will be faced with more choice.

Lucy Dunbar, senior associate at Sackers, says: "What would clearly undermine pension savings is if individuals opt-out of their auto-enrolment scheme in favour of a LISA and lose out on valuable employer contributions as a result. 

"Therefore, how LISAs might interact with or complement the current auto-enrolment framework, and ensuring that individuals understand this, will be key."

Based on responses from 70 UK employers, trustees and advisers attending recent Sackers' events, the study shows the majority of respondents (84%) want to help staff understand their options by providing financial guidance to help them make the right decisions. 

However, 95% find it difficult to do so, with 41% of them saying legal concerns and liability risks are the main obstacles for offering education or guidance. A third (34%) cites affordability while 20% blame lack of expertise, and the remaining 5% do not consider the task as a priority. 

According to Sackers, the Pensions Regulator and the Financial Conduct Authority are working to publish a joint factsheet in early 2017, setting out the help employers and trustees can provide without being subject to additional regulatory requirements.

"The fact that the majority of employers want to offer this guidance is a very positive message, but it is clear the industry needs to do more to break down the barriers to providing clear and effective guidance to pension scheme members," said Dunbar. 

This article appeared in our May 2016 issue of The Actuary.
Click here to view this issue
Filed in:
05
Topics:
Pensions
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