"The survey clearly shows that both professionals and the general public agree that critical illness and redundancy should be included in the additional lifetime events."
TISA, the financial services membership association, believes that the Government should expand the scope of the new LISA to allow early access for additional lifetime events.
Its survey found that in addition to the current withdrawal criteria (lifetime events of house purchase for first-time buyers, terminal illness and retirement at 60 years), both critical illness (69%) and redundancy (52%) should be eligible for early access and benefit from the Government bonus.
Industry professionals and the general public were in agreement that these are the top lifetime events that should be included.
The Lifetime ISA was announced by the Chancellor in the last Budget and will be launched in April 2017. Individuals will be able to save up to £4,000 each year, and receive a 25% bonus from the Government, which is capped at a maximum of £1,000 a year.
However, those wishing to withdraw their savings before they turn 60 for uses other than house purchase and terminal illness will lose the Government bonus (and any interest or growth on this), and will also have to pay a 5% charge.
Other findings show parent’s nursing care fees, getting married, funeral costs for relatives and children’s education were amongst other choices hoped to be included as additional lifetime events in the LISA for penalty free withdrawal, though they proved significantly less popular amongst the general public and industry alike.
Adrian Boulding, TISA Policy Strategy Director, said: “The survey clearly shows that both professionals and the general public agree that critical illness and redundancy should be included in the additional lifetime events. Interestingly, whilst the general public want moving to a bigger home to be included as the third lifetime event, professionals worry that it would make the LISA too complicated.
“We believe that people need more short-term incentives to save. People will typically make sacrifices up to about five years, beyond five years it is harder for human beings to plan for lifetime events. That’s why we are in favour of the LISA having additional lifetime events. We can imagine a sequence of approved lifetime events whereby people put money into the LISA, save up for the next lifetime event, for example, getting married, moving to a big home, withdrawing some of the money for that lifetime event and then continuing to save again.
“Based on the responses, we see this as a great opportunity for the Government to provide people with greater choice and flexibility. We are pleased with the responses from the survey and we will continue to work closely with the Government, industry and trade bodies in the consultation around the policy.”
