Anger as Government ignores call to dump the Lifetime ISA
IT IS “disappointing” that the UK Government has ignored calls for the Lifetime Isa to be scrapped, the chairwoman of a powerful committee of MPs has said.
Nicky Morgan, who chairs the Treasury Committee, also said the Treasury had not demonstrated an increased sense of urgency needed in some key areas of households’ finances which had been identified by the committee.
She made the comments as the committee released the Government’s response to the committee’s Household Finances report published in July, which had said hard-pressed households need more help to deal with debts and save.
The Treasury Committee had called for the Lifetime Isa to be scrapped due to its “perverse incentives and complexity”.
Lifetime Isas allows people to save for their first home or their pension in one pot.
But concerns were previously raised that savers could be discouraged from saving into a workplace pension, where they also get the benefit of employer contributions.
Critics also argue that a first home and a retirement are separate goals which should not be lumped into one savings vehicle.
Commenting on the Government’s response, Ms Morgan said: “The committee expressed concern about the complexity and perverse incentives of the Lifetime Isa.
“It is disappointing, therefore, that the Government ignored the committee’s call for the Lifetime Isa to be abolished, and will press on without reform.”