High and hidden charges attached to the Lifetime Isa (Lisa) could reduce the value of savings pots by about 13 per cent, according to a Pensions Policy Institute (PPI).
Speaking on Monday at an event to launch research conducted by the PPI, Daniela Silcock, head of policy research at the organisation, raised concerns about the fact that the Lisa is not going to be part of the private pension market.
As a result, the Lisa will not be regulated in the same way as private pensions or subject to charge caps.
Ms Silock said the PPI had recently undertaken modelling looking at the impact of charges which compared a 0.3 per cent charge to stakeholder charges, which are 1.5 per cent for the first 10 years, then 1 per cent for every year afterwards.
Ms Silcock said: “That can reduce your pot at retirement by about 13 per cent, so charges do have a massive effect..”
John Stirling, chartered financial planner at Essex-basedWalden Capital, said Lifetime Isas and workplace pensions are targeted at different audiences, although, on the face of it, they offer similar investment experiences.
He added: “Lisas will have full competition between brands. Customers who wish to differentiate on price should have the option, while those who want to differentiate on features or benefits have the opportunity.”
ruth.gillbe@ft.com
