Some have called the Lisa a stealth move to do away with pensions. I would call it a clear statement of intent from the Chancellor.
It provides a tax-exempt-exempt vehicle for retirement saving for everyone under 40. If the Chancellor raises the £4,000 limit on bonus payments and allows workplace contributions to the product under auto-enrolment, I do not see a need for pensions for the majority of the population (especially as higher rate tax relief’s days are numbered). I think it is fair to say that the death knell has been sounded for pensions in the longer term.
However, the challenge for firms looking to bring a Lifetime Isa to market will be that product functionality is typically well and truly baked into back office systems offering little flexibility (especially in proprietary builds or older systems).
Compounding this problem are many legacy processes which are reliant on paper and do not scale under pressure. To make a change, you need support from IT, and for most platform providers, development roadmaps are already stacked out. Something is going to have to give in order to bring propositions to market by April 2017.
What seemed like a simple idea on first inspection is likely to have people scratching their heads for a while as to exactly how to deliver it. Some firms may be better looking away from supercharging their Isa system, and instead simplifying their pension solution. Either way, while the Chancellor has set his stall out regarding what he wants to achieve with the product, I am not sure the industry is clear on how they are going to deliver it.
Adam Jones
Senior consultant,
Altus,
Bath
