"Ministers have not gone far enough in reforming Lifetime Isas (LISAs) despite being warned these products were not suitable for everyone, Treasury Committee has warned. Ahead of the November Budget MPs also questioned whether LISAs in their current form were a good use of taxpayer money, as they are forecast to cost the government 3bn over five years. Anyone aged under 40 can open a LISA to either help save towards retirement or buy a first home."
"In its report, the committee said the LISA's dual purpose to help people save for both the short-term (for a first home) and long-term (for retirement) "makes it more likely consumers will choose unsuitable investment strategies". Research by HM Revenue and Customs, based on a sample of LISA holders, found that 87% of those who had used their LISA to buy their first home said that they could have done so without one."
Lifetime ISAs allow people under 40 to save up to £4,000 yearly with a 25% government bonus and can be used for a first home or retirement. Uptake has reached about 6% of eligible adults, with 1.3 million accounts open since the 2017 launch. The Treasury Committee found widespread mis-selling and a confused dual purpose that encourages unsuitable investment strategies. HMRC research indicated 87% of LISA homebuyers could have purchased without one. Forecast public cost is £3bn over five years, prompting questions about cost-effectiveness. The government says it keeps LISA policy under review and has made limited changes.
Read at www.bbc.com
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