Employers fear the introduction of the Lifetime Isa (Lisa) will cause confusion for staff looking to save, according to research from Close Brothers.
A poll of 900 employers in the UK showed two out of five (39 per cent) have worries on this issue, with 16 per cent expecting the Lisa will reduce employee contributions to workplace pensions and workplace share schemes.
The Lifetime Isa, or Lisa, allows people under the age of 40 to start saving up to £4,000, plus a 25 per cent bonus from the government, towards either a first home or their retirement.
Just 20 per cent of employers polled expected to arrange additional financial education about the range of savings options available following the introduction of the Lisa, which Close Brothers argued is likely to result in further confusion among employees, lower uptake of workplace savings schemes and a potential knock on effect on financial wellbeing, engagement and retention.
A total of 16 per cent of businesses surveyed expect to see both reductions in contributions to workplace pension and share schemes as a result of the launch of the Lisa.
Former pensions ministers Steve Webb and Ros Altmann have also raised concerns the Lifetime Isa would encourage people to opt out of auto-enrolment.
However, a recent survey by Hymans Robertson of 1,000 people revealed of the 61 per cent of workers under the age of 40 who plan to invest in a Lifetime Isa, more than two thirds (68 per cent) would continue to contribute to a pension.
Nearly half of employers (48 per cent) stated they were worried about all of their employees’ poor financial wellbeing, with 68 per cent stating workplace financial education should be provided to all staff.
Jeanette Makings, head of financial education at Close Brothers, said: “With pensions, share schemes and Isas in the workplace and other non-workplace investments the financial landscape is more complex than ever for individuals to navigate.
"Saving schemes are not a ‘one size fits all’ and employers have a pivotal role in ensuring staff are equipped with the tools and support to improve their understanding and make the best savings choices for them whatever their age, career stage and personal circumstances."
But Tom McPhail, head of pensions research at Hargreaves Lansdown, said he had not seen any evidence - so far - of confusion regarding the choice between a pension and a Lisa.
He said: "This decision (whether to opt for a Lisa or pension) and the communication around it looks reasonably straightforward.
"Where we think (former chancellor) George Osborne got it wrong was in creating a whole new Isa.
"We’d like to see all the different Isas (Cash, stocks and share, Innovative Finance and Lisa) rolled into one simple tax privileged non-pension savings plan."
Chris Daems, director of Cervello Financial Planning, agreed with Mr McPhail's comments.
He said: "I don't believe the Lisa will have any detrimental impact to the automatic enrolment project.
"While some employees may opt out to contribute into a Lisa the reality is that most employees are creating a pension saving habit through auto-enrolment which won't be impacted fundamentally by the introduction of the Lisa.
"Although time will tell, I suspect that financial institutions are worrying about this more than most employees."
stephanie.hawthorne@ft.com
