Doubt has been cast over the launch of the Lifetime Isa, as a number of providers, including Standard Life and Aegon have said they will not be ready to offer the savings product in time for next year’s deadline.
Pension providers and asset managers are calling on the government to press pause on the planned launch of the new Isa, which is set to go ahead in April next year.
Announced by the former chancellor George Osborne in his March Budget, the Lifetime Isa offers government-backed support to first time buyers and looks to encourage under 40s to start saving for retirement.
Standard Life and Aegon have confirmed they have put their plans on hold because the final details around the Lifetime Isa, or Lisa, have not yet been released.
Steven Cameron, pensions director at Aegon, said the insurer had expected to have full details by July this year at the latest.
“With no details from the Treasury and with the Financial Conduct Authority still to consult on how it will regulate the product and how it is sold, it is looking increasingly unlikely that we or other providers will be able to research, design and deliver a product by next April.”
He pointed out that the FCA consultation is likely to take three months.
“We believe the Treasury should consider either delaying the launch or alternatively seeking to deliver the aims through other means, which could then be delivered more quickly.”
A spokeswoman from Standard Life said: “In order for the Lifetime Isa to be delivered in a cost-effective way and for the end customer to get value from it, we need more information about how it will be regulated.”
She also said it was “essential” for the industry to engage with FCA on the regulation of the product.
“At present we do not feel there is sufficient time to properly do this and launch next April.
“As we want the Lifetime Isa to be a success, we would prefer that its launch is delayed until providers receive more detail on the product and how it is to be implemented.”
We would urge that the Lifetime Isa is delayed in order to avoid a piecemeal implementation. Richard ParkinRichard Parkin, head of pensions at Fidelity International, echoed this, saying there is a “good case” for delaying the launch of the Lifetime Isa.
He said the launch should be put on hold until HM Revenue & Customs is able to support monthly payments of the government bonus, which offers Lisa holders an additional 25 per cent on top of the amount they have already saved.
Mr Parkin said: “The industry is pretty unanimous that this is a more effective way of paying the bonus and there seems little merit in launching the product with annual bonuses and then having to do further work on administration systems and communication materials in 12 to 18 months’ time.
“There is a suggestion that the new government may want to revisit the issue of pensions tax relief and if this is the case then we think that everything should be looked at in one go.”
With this in mind, Mr Parkin said he would urge the Lifetime Isa launch to be shelved until a later date in order to avoid a “piecemeal implementation”.
katherine.denham@ft.com
