LISA for pension

[colin86]

Morning

A was wondering how many people have got a LISA
For purpose to your pension? A was thinking it could be a good addition on top of a private pension.

What are peoples thoughts on this ?

Thanks

[SaulGoodman]

On 5 Live this morning there was an hour long show on LISAs, both pension and FTB. Worth going back and listening to, he is always good on detail.

[bitchstewie]

Article on the BBC today.

https://www.bbc.co.uk/news/articles/cy0w8x2zxzko

[AllyM]

I do, but isn’t there renewed chatter about the LISA disappearing as there is a belief that people don’t understand it and are being caught out by the rules vs a ISA? Hmm.

I’ll keep sticking £4k/yr in as long as it remains an option.

[SJfW]

AllyM said:

I do, but isn t there renewed chatter about the LISA disappearing as there is a belief that people don t understand it and are being caught out by the rules vs a ISA? Hmm.

I ll keep sticking £4k/yr in as long as it remains an option.

I don't think the chatter is around getting rid of the LISA, more about it needs reviewed as lots of people are being caught out by the early withdrawl charge and getting out less than they put in. There's also noise about the limit on first home purchase price being set at £450k and this is too low.

On the former, its not exactly an unknown that you have an early withdrawl penalty, but I think it would be fairer if the early withdrawl fee was 20% of the total rather than 25% of the total for more equivalence to the pay in bonus.

On the latter, outside the south east, this isnt even vaguely a problem for normal people.

I have a LISA but its very much an after thought pot, primary savings remain through a normal ISA and pension through salary sacrifice at work. The LISA is a pension bonus pot mostly to stop me frittering away random bits of cash that pop up every now and then.

[hidetheelephants]

I've got one; free money from the govt? Thank you very much, kerching!

[itlab]

Ive got one with a token amount but despite the advice seeming being that its a good thing I can't see the benefit vs pension contributions.

Back of a napkin maths assuming ive got an extra £100 to save a month for easy maths

with that £100 I could put it into my pension via salary sacrifice, whole £ goes in tax free but will be taxed on exit. 25% tax free the rest likely taxed at 20%

Assuming 5% growth thats 258 in 19 years

64.5 tax free
193 @ 20% - £154

£218 in my pocket age 60

if I save it into a LISA once ive taken of income and NI Ive got £60 in my account

60 + 25% > £75 in Lisa

Assuming 5% growth thats £193 age 60 or about 12% less than id get from my pension

( or have I missed something? ie the expectation of increased fiscal drag meaning even a modest pension would be taxed at 40% or is my maths missing something)