Lisa: the word on everyone's lips

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Tough choices in the later life landscape

Lisa: the word on everyone's lips

Scores of industry delegates flocked to London on a cool September’s day for the latest instalment of FTAdviser’s Retirement Freedoms Forum to broaden their knowledge of the ever-evolving pensions landscape.

One of the hot topics at the event, held at The Cumberland hotel in the heart of the capital, was the Lifetime Isa.

Fresh from her stint as pensions minister, Baroness Ros Altmann delivered a damning assessment of the product in her keynote speech.

Baroness Altmann, who held the government role at the time then-chancellor George Osborne unveiled the Lisa, said: “In my view Lifetime Isas risk poorer pensioners in the future and it is a disaster in the making.

"This product has mis-selling written all over it. Just think about it from a customer’s perspective."

Baroness Altmann was particularly scathing in her evaluation of the 5 per cent penalty and the loss of the 25 per cent government bonus on the entirety of the fund, plus any investment gains for unauthorised withdrawals.

“I am not surprised that so many providers are saying they don’t want to bother with this thing, not just because they don’t know all the details, but because it is fundamentally – as a pension – not a good product.

“There are no controls on the charges with this. What consumer protection is there?”

In addition, the product may play into the hands of top earners, she said, who have fulfilled the £1m pension lifetime allowance, the £40,000 annual allowance and invested £3,600 into a pension for their grandchildren and are also looking at other ways to help them.

She said: “These top earners have another taxpayer incentive using taxpayers' money for their long-term savings. Is that what we are trying to achieve with the public spending on pension savings incentive? Are those the people we need to be worried about?

“Surely we want to find a way to help ordinary people have better pensions and make pensions themselves work better.”

Her sentiments were echoed to an extent by participants of a panel session, which explored whether the Lisa sounded the death knell for pensions.

The four-man panel consisted of Rob Yuille, assistant director, head of retirement policy at the ABI; Andy Springford, senior manager of Mazars Financial Planning; Chris Daems, director of London-based Cervello Financial Planning IFA; and David Thomas, chief executive of Seneca Investment Managers.

Mr Yuille said the objectives of the Lisa, due to come into effect in April next year, were somewhat confused. 

Mr Springford agreed, naming the product "a gimmick". He said: “I’m not entirely convinced about what gap it is trying to fill. If you use it properly, you can’t access it until you are 60, which is later than the current pension age, and you get fewer tax reliefs for it on top of that [inheritance benefits and marginal tax rates].