Risk warnings cover:
- early exit penalty
- missing employer contributions to workplace or personal pensions
- losing out on means-tested benefits
Tom Selby, senior analyst at AJ Bell, comments:
“The FCA is right to focus on the key consumer risks presented by the Lifetime ISA – namely people missing out on employer pension contributions, whether that be via a workplace or personal pension, and investing without being fully aware of the implications of the early withdrawal penalty. Adding information about the risk of losing out on means-tested payments also makes sense.
“Equally, we need to remember those who stand to benefit from the product. The LISA could be an attractive option for young people saving for a first home and basic rate taxpayers saving for retirement, for example.
“The approach to disclosure strikes the right balance between flexibility and personalisation, providing investors with a useful indicator of what they might get back without burdening them with pages of information they will never read.”