Two in five businesses expect the introduction of the Lifetime ISA to cause confusion among employees saving towards retirement. Jeanette Makings, Head of Financial Education at Close Brothers.
Sixteen percent of businesses expect that LISA will reduce employee contributions to workplace pensions and workplace share schemes. However, just 20 percent of employers expect to arrange additional financial education about the range of savings options available after its introduction and two in five (39 percent) employers believe the introduction of the Lifetime Isa (LISA) will cause confusion for employees looking to save, according to the latest Close Brothers Business Barometer.
Despite the anticipated effects, just 20 percent of the 900 UK employers surveyed plan to react by arranging further financial education schemes to better employee understanding and help in the decision making process between a LISA, pension or other saving options. This is likely to result in further confusion among employees, lower uptake of workplace savings schemes and a potential knock on effect on financial wellbeing, engagement and retention. 16 percent of businesses surveyed expect to see both reductions in contributions to workplace pension and share schemes. Nearly half of employers (48 percent) stated that they were worried about all of their employees’ poor financial wellbeing, with 68 percent stating workplace financial education should be provided to all staff.
Jeanette Makings, Head of Financial Education at Close Brothers commented: “In our current economic climate, with a rising state pension age and house prices remaining out of reach for many, any initiatives that encourage a savings plan should be welcomed. Even without the LISA, employees have a choice of savings vehicles in the workplace that offer a range of different benefits, helping them save for retirement, for a home or for a rainy day. The introduction of the LISA may help engage more young people in starting their savings journey but it is another choice and with choice comes confusion and possible missed opportunities or poor decision making.
“With pensions, share schemes and ISAs in the workplace and other non-workplace investments the financial landscape is more complex than ever for individuals to navigate. Saving schemes are not a ‘one size fits all’ and employers have a pivotal role in ensuring staff are equipped with the tools and support to improve their understanding and make the best savings choices for them whatever their age, career stage and personal circumstances.
