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Lifetime ISAs leave some with less money than they put in, say MPs
UNITED KINGDOM, JUN 29 – MPs warn the Lifetime ISA's complexity and 25% withdrawal penalty risk poor decisions and penalise benefit claimants, with 99,650 unauthorised withdrawals recorded in 2023-24.
- During the 2023-24 financial year, there were approximately 1.3 million active Lifetime ISA accounts, with 56,900 account holders using their savings to purchase a home, while 99,650 made withdrawals that did not meet the scheme’s conditions.
- Lifetime ISAs, launched in 2017, offer a 25% government bonus but apply a 25% withdrawal charge on unauthorised withdrawals, causing holders to lose bonuses and 6.25% of their own savings.
- MPs and the Treasury Committee expressed concern that the product's complexity may lead savers to make poor financial decisions and questioned if it targets those most in need effectively.
- The committee described rules penalising benefit claimants as nonsensical, argued the product subsidises wealthier first-time buyers, and recommended adding warnings or reforming the ISA.
- Plans for imminent changes to the Lifetime ISA are under consideration as calls grow to ensure the scheme delivers good value for money and effectively supports savers during current economic challenges.
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43 Articles
43 Articles
Craven Herald+22 Reposted by 22 other sources
'Nonsensical' savings scheme should come with a warning say MPs
A committee of MPs described current Lifetime Isa rules penalising benefit claimants as “nonsensical”
·Skipton, United Kingdom
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Coverage Details
Total News Sources43
Leaning Left3Leaning Right1Center27Last UpdatedBias Distribution87% Center
Bias Distribution
- 87% of the sources are Center
87% Center
C 87%
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