The new Lifetime Isa may appeal more to lower rate taxpayers who want to purchase a property than to higher rate taxpayers or those saving for retirement, according to Adrian Lowcock.
The investment director at Architas called the Lifetime Isa, which is due to launch in April, a “cross between a pension and an Isa”.
The latest addition to the Isa product range has been dubbed the forerunner to a pension Isa by many, although it will only be offered by a handful of providers, including Hargreaves Lansdown and True Potential.
But Mr Lowcock explained: “I think it particularly appeals to those people saving for deposits for houses because you get the government uplift on contributions and that’s quite significant.
“It’s not quite good enough if you’re a higher rate taxpayer, so if you’re saving into a pension and for retirement then a pension is still more attractive.
“But for those saving for a deposit for a house and… they’re not quite ready to lock their money up into a pension because they may want to use it for buying property then the Lifetime Isa looks quite attractive for that, particularly if you’re a basic rate taxpayer or lower rate taxpayer it looks very attractive.”
The Lifetime Isa, or Lisa, will be available to those aged 18 to 40, with savings capped at £4,000 a year and a 25 per cent bonus of up to £1,000 a year.
He urged savers to put as much into their Isas before the 5 April deadline and reminded them it was a “use it or lose it allowance”.
“Don’t be too concerned about what’s going on with markets at this point in time, it’s about using that allowance,” Mr Lowcock said.
Turning to the rising threat of inflation, he predicted it “might peak at around the 3 per cent level and then come off again”.
“What we’ve seen is certain assets like inflation-linked bonds have risen quite strongly on anticipation of inflation,” he observed.
“However, there are still assets that are quite attractive. Actually equity income, which has sold off following the Trump reflation rally, still looks attractive and equity income offers you a growing dividend.”
Watch Mr Lowcock take part in an FTAdviser live debate on how to inflation-proof your portfolio.
eleanor.duncan@ft.com
