There is considerable media coverage at the moment focusing on Auto Enrolment and the new Lifetime ISA (LISA) which is scheduled to commence April 2017. The main concern is centring on the impact LISA’s will have on future pension savings and their potential to derail Auto Enrolments success.

Research from NOW Pensions has revealed that among young savers 30% plan to save in both a workplace pension and LISA when it launches, with 16% just into a workplace pension. A further 9% would stop contributing to Auto Enrolment altogether to shift to the LISA next April.

Clarke Nicklin Financial Planning Partner & IFA Scott Herbert comments ‘There are attractions to both LISA’s and pension saving depending on your age, income, employment status and circumstances, and with retirement on average stretching over three decades it is important to get it right. Once you are armed with the right information you will have the ability to make informed choices to consider what the best options are.’

As always the best way to invest for the future is to formulate a bespoke plan designed specifically for you. It is also vital to continuously review your pension and other investments, and monitor the level of funding required to ensure you will be comfortable in retirement.’

We have advised many companies on Auto Enrolment, and as part of our service we offer a pension and financial planning review to all employees to ensure they fully understand all opportunities and any implications.’

Many of the population may feel that a choice may have to be made between the two options due to their levels of disposable income.

There has never been a more relevant point to seek financial advice. This advice will clarify the long and short term options available to individuals based on specific needs and objectives.

Auto Enrolment

  • Age limit between 22 and state pension age
  • Employees and employers initially contribute a modest 2% of earnings, which increases to 8/9% by 2018
  • Annual allowance is up to £40,000 per annum with some stipulations. It can be complicated to work out

Lifetime ISA (from April 2017 and subject to change)

  • Must be opened between the ages of 18-40, can contribute until 50 and obtain tax relief
  • Government contribution gives 25% bonus each year up to a maximum of £1,000 (this could potentially change) up to 50th birthday
  • Must be used to buy your first home or it is locked until you reach 60 (unless you want to sacrifice the bonus and pay 5%)
  • Potentially more beneficial for self-employed whom do not receive the benefits of statutory appropriate for employers benefits and NI contribution relief.
  • Annual allowance is up to £4,000 per annum (£20k annual ISA limit)

Both Scott and Tax Partner Paul Draper are hosting a free ‘Lifetime journey of investment planning’ breakfast seminar on Wednesday 22nd June 2016. Please email Julie@clarkenicklin.co.uk to book or for further information.

This article is for information purposes only and should not be construed as advice. Please seek professional financial advice before acting, or not acting, on this information.

A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.

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