Punter Southall Comments on new Lifetime ISA
16 Mar 2016

Comments from Punter Southall Group on the Budget

Sarah Brown, Principal, Punter Southall commented: “The availability of more choice and help for young savers is very welcome removing the need for them to choose between saving for pensions and their first home. However it is important that the Lifetime ISA does not undermine auto-enrolment by tempting employees to move out of occupational schemes where they will  get at least £3 from their employer for every £4 they save as well as the £1 from the Government. It is perhaps disappointing that the consultation on pensions taxation has seemingly been left hanging with no certainty as to whether the existing  regime of occupational pension scheme tax reliefs including higher rate taxation will be revisited at subsequent post referendum Budgets.”

Danny Vassiliades, Managing Director, Punter Southall Investment Consulting added: “If the projected debt forecasts are met, then there will be a shrinking supply of gilts available for pension funds to buy, at a time when those funds’ increasing maturity suggests that their demand for gilts will be strong. This may well provide a drag on any forthcoming increases in market bond yields, and lessening the prospect of future yield rises reducing scheme deficits.”

Richard Meek, Head of Technical, PSFM, a Punter Southall Group Company said: “It’s a good idea to encourage long term saving from an early age with a view to retirement, but with an option to “stop the bus and get off” along the way and use funds towards house purchase and with a penalty for some other purpose. The danger is that it is viewed as all you need to do to save for retirement, as if the funds are subsequently used for house purchase you are starting from scratch again but might have lost 10-15 years of your career to sort out an alternative retirement plan.

It also forms part of the ongoing trend in the recent budgets of removing the ability to reduce or defer high rates of tax on higher levels of income in favour of more generous treatment of gains made from post tax income.”