52 believe the lifetime Isa will discourage younger staff from pension saving

first_imgMore than half (52%) of employer respondents believe the lifetime individual savings account (Lisa) is likely to discourage younger employees from saving into a workplace pension, according to research by the Association of Consulting Actuaries (ACA).Its 2016 smaller firms pension survey, which surveyed 455 organisations with less than 250 employees, also found that 72% of respondents are confused by the planned launch of the Lisa in April 2017 given the government’s promotion of workplace pensions through auto-enrolment.The research also found:23% of respondents feel that younger people should be encouraged to save into a Lisa rather than a workplace pension.31% of respondents believe the Lisa will have no impact on workplace pension saving.50% of respondents think the Lisa should be supported and will be popular with younger employees.33% of respondents believe the current structure of pension tax relief should remain unchanged.60% of respondents feel the current pension tax system should be retained with more help targeted on lower income groups.44% of respondents believe that pension tax relief should be further restricted for individuals on a higher income.25% of respondents think pension tax relief on contributions should be abolished and pensions should be paid tax-free.13% of respondents would support the removal of national insurance contribution relief on employer pension contributions.Bob Scott (pictured), chairman at the ACA, said: “Initiatives to encourage saving generally are to be welcomed, but incentives need to be viewed in a holistic way so that longer-term saving attracts greater support and so that one product does not compete or conflict with another.“While Lisas may not initially discourage younger employees from opting out from auto-enrolment pensions while minimum employee contributions are below 1% of earnings, there must be a real query over whether this will remain the case when minimum employee contributions climb to over 3% of earnings in 2019, and possibly higher levels in years to come.“Wholesale reform of pensions tax is long overdue; the more tinkering the government does the more that individuals and their employers lose confidence in pensions.”last_img read more