PensionsAug 19 2016

Zurich stands by April launch date for Lifetime Isa

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Zurich stands by April launch date for Lifetime Isa

Zurich has confirmed it is still committed to launching a Lifetime Isa in April 2017, after a number of fellow life companies called for the launch date to be delayed.

However, Zurich urged the government to release the specifications of the new investment wrapper as soon as possible to give providers time to design a product.

According to the details laid out by then-chancellor George Osborne in the March Budget, the Lifetime Isa, or Lisa, would allow people under 40 to begin putting aside up to £4,000 a year after tax, plus a 25 per cent government bonus, towards either a first home or their retirement.

But five months on, the government has still not released the specifications, leading many providers to warn there is not enough time to design a product.

Aegon went a step further, with head of pensions Steven Cameron calling for the retirement aspect of the Lisa to be scrapped altogether, turning it into a souped up Help to Buy Isa.

But Zurich’s head of retail platform strategy Alistair Wilson said the firm was still optimistic of meeting an April launch date, adding that the retirement aspect would actually be the key feature for its target customers.

“We’re looking to build a lifetime Isa next year. We’re not backing away from it. But we need government to tell us what the rules are sooner rather than later, because it’s a big build.”

Back in June, days after the Brexit vote, representatives from Treasury and HM Revenue & Customs said the specifications would be released in “early autumn”.

Mr Wilson said, if “early autumn” meant September, then Zurich would expect to have a product ready by April. But he said the government would need to retain the simplicity of Mr Osborne’s outline, crucially avoiding any complicated add-ons.

Mr Wilson said he expected Zurich’s clients to use the Lisa to save for their retirement rather than a first home.

He said those saving for a first home were more likely to keep their Lisa in cash accounts, most likely provided by banks. Investment platforms, he said, were better suited for those saving for retirement.

However, he said he did not expect the retirement aspect of the Lisa to encourage people to opt out of auto-enrolment, as many fear it will. He pointed out that opting out of AE would mean foregoing employer contributions. But giving people an extra avenue by which to save for retirement was a positive.

“Anything that gives people the opportunity to save more for their future has to be a good thing, and I the Lifetime Isa will achieve that. But it has to be simple for people to understand,” he said.

james.fernyhough@ft.com