Employer Survey: Lifetime ISA will increase need for workplace Financial Education

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Nine in every 10 UK employers recognise that the launch of the Lifetime Individual Savings Account (LISA) in April this year will increase the need for employee financial education.

A survey by Jelf Employee Benefits found:

  • 90% of employers believe that the introduction of new saving options in last year’s Budget increases the need for financial education in the workplace
  • 3 in every 4 employers (75%) do not believe their employees will fully understand the limitations of the Lifetime ISA
  • Over a quarter (26%) of employers expect some employees to save in a Lifetime ISA instead of a workplace pension

The survey reflected the views of private, public and third sector employers across England and Wales during 2016.

The Lifetime ISA is due to launch in the next few months and is designed to provide savers below the age of 40 with government financial support towards either a first home purchase or retirement. The initiative has been enthusiastically welcomed by its target audience, yet there are some genuine concerns that the product is rather more complex than savers may at first understand.

“For many savers, the prospect of receiving government financial support towards a home purchase is a very attractive proposition,” says Steve Herbert, Head of Benefits Strategy at Jelf Employee Benefits. “But scratch the surface and you will find that LISA is a rather complex offering, with several limitations that savers really need to be aware of before opening such an account.”

Jelf Employee Benefits highlight key areas of concern and confusion as the limitation of the government “bonus” contribution to a first property purchase only, a 25% withdrawal charge in some circumstances and cessation of government “bonus” contributions from age 50 onwards.

There are also worries that the launch of LISA may lure some savers away from pension savings.  This has the potential to undermine the success of another government initiative – Pensions Auto-Enrolment – and a recent FCA consultation paper also highlighted this concern.

“In truth LISA is a hybrid product, being neither a pension plan nor Individual Savings Account,” continues Steve Herbert.  “The headline appeal of the product may mask its limitations and could mean some savers make poor or ill-informed decisions.  In a worst case scenario this could lead to an employee forfeiting their right to an employer pension contribution.

“It is, however, good news that employers already understand and appreciate these concerns and we hope that these findings encourage even more employers to provide their employees with holistic financial education in the workplace.”

The 2017 Jelf Employment Survey was undertaken at seminars in London, Cardiff, Chester, Leeds, Manchester and Bristol in the second half of 2016.

Question data

Question 3
Do you believe that the introduction of new saving options in Budget 2016 increases the need for Financial Education in the workplace?
Yes 129 89.58%
No 8 5.56%
Don’t know 7 4.86%
Number of responses 144
Survey dates and locations Cardiff 22/03/16, Chester 19/04/16, London 12/05/16


Question 29
Do you believe your employees will fully understand the limitations of the Lifetime ISA (LISA)?
Yes 27 15.17%
No 133 74.72%
Don’t know 18 10.11%
Number of responses 178
Survey dates and locations London 25/11/16


Question 30
Do you expect some of your employees to save in a LISA instead of a workplace pension?
Yes 46 25.70%
No 92 51.40%
Don’t know 41 22.91%
Number of responses 179
Survey dates and locations London 25/11/16
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About the author

Steve Herbert is an award-winning thought leader on Pensions and Employee Benefit issues. His principal aim is better communicating the value and usage of employee benefits to employers. This he has achieved through many (highly successful) seminar series over the last decade, and his regular and widely read blog posts on the subject.
He also acts as a judge in HR and Employee Benefits industry awards, article writer, and product innovator. Steve is a regular contributor to DWP forums and compulsive responder to formal Government Consultations on pension and employee benefit issues. He is occasionally accused of making employee benefits interesting.