Scrapping the Lifetime ISA risks millennial backlash


The Government would risk a backlash from younger voters if it caves to pressure to scrap the Lifetime ISA (LISA), AJ Bell warns.

A recent report into household finances by the Treasury Committee was scathing in its assessment of the LISA – a product created in 2016 to help young people save for a first home or retirement.

The Committee specifically criticised the LISA for being unpopular, too complex, having “perverse incentives” and not complementing traditional pensions.

Tom Selby, senior analyst at AJ Bell, says: “The Government will cause uproar among younger voters if it caves in to pressure to scrap the Lifetime ISA. The product has been a hit with consumers so far and it would be ludicrous to pull the rug from under people now.

“Nobody is claiming the LISA is perfect, and policymakers need to look at ways to make the transfer process easier to navigate. The 25% exit penalty also remains a bone of contention and should be reduced so as not to excessively penalise savers.

“But ditching the LISA now would make little sense and risks leaving hundreds of thousands of people who have already invested stuck in limbo.”