Should you swap a pension for a Lisa?

Lifetime individual savings accounts (Lisas) should be with us in April. Are they a better bet for your retirement? David Prosser investigates.

Despite calls for a delay to the launch of lifetime individual savings accounts (Lisas), amid concern that providers don't have enough time to design new products, the Savings Bill now winding its way through Parliament paves the way for their introduction in April 2017. And while the government is primarily pitching Lisas as extra help for people struggling to get on to the housing ladder, the accounts could also be an attractive way for many people to save more for retirement.

Lisas will be available to savers aged 18 to 40, as part of the general Isa allowance, which rises to £20,000 from April. You'll be able to put up to £4,000 into a Lisa each year, with the government adding a top-up bonus of £1 for each £4 saved or £1,000 if you save the maximum £4,000 over the year. The money can be invested in the same range of assets as other Isas, so can be used for long-term goals such as retirement planning. Still, compared to traditional private pension plans, which offer tax relief on contributions rather than a bonus, there are both pros and cons to Lisas as pension vehicles.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.