Source · Select Committees · Treasury Committee
Recommendation 4
4
Accepted
Balance reducing the Lifetime ISA withdrawal charge against government spending impact, retaining deterrent.
Conclusion
Many people have lost a portion of their savings due to a lack of understanding of the withdrawal charge or because of unforeseen changes in their circumstances, such as buying a first home at a price greater than the cap. However, the case for reducing the charge must be balanced against the impact on Government spending. The Lifetime ISA must include a deterrent to discourage savers from withdrawing funds from long-term saving. (Conclusion, Paragraph 46) Saving for a home with the Lifetime ISA
Government Response Summary
The government committed to considering the recommendation in future policy development and specifically to working with industry and other government departments to improve messaging about the implications of savings and investments for Universal Credit entitlement.
Government Response
Accepted
HM Government
Accepted
We will consider the recommendation in the future development of the policy. However, the Lifetime ISA is a savings product and other savings and investments products, which may also be used for later life, also count towards calculation of Universal Credit. The Government is involved at the point of approval of providers. There is no direct contact or interaction with individuals. The Money and Pensions Service (MaPS), an arm’s length body of the Government, provides comprehensive guidance to support consumers at every stage of their financial lives. MaPS offer a range of tools and calculators to help consumers with various issues around everyday money and savings. This includes guidance on the Lifetime ISA which covers the implications for benefit eligibility. We will work with industry and other Government Departments to consider ways to improve the messaging about the implications of savings and investments might affect entitlement to Universal Credit. 5