Source · Select Committees · Treasury Committee
Recommendation 14
14
Rejected
Treat Lifetime ISA savings equally to other pension products within Universal Credit means testing.
Recommendation
If the Government wants to encourage long-term saving for retirement through Lifetime ISAs, it must treat the savings in a Lifetime ISA in the same way as other pension savings products as part of the Universal Credit means test. (Recommendation, Paragraph 106)
Government Response Summary
The government rejects the recommendation to treat Lifetime ISA savings like other pension products for Universal Credit, stating it is a savings product that counts towards capital calculations for UC eligibility, with a rationale for targeting support.
Government Response
Rejected
HM Government
Rejected
The Lifetime ISA is a savings product. As with other savings and investments products it counts towards calculation of UC. In calculating entitlement to UC it is the realisable value of the Lifetime ISA which is used (i.e. after deduction of the withdrawal charge) not the amount held in the account. Households will be ineligible for Universal Credit if they have capital over £16,000. In such cases, it is likely that they have alternative means of financial support, so this limit ensures that help which comes from taxpayers, many of whom have limited capital, is directed to families who need it most. Universal Credit is there to support people who do not have sufficient resources available to meet their basic needs. While it is important to protect the incentive to save for customers on low earnings, people with substantial capital should take responsibility for their own day-to day support.