Smarterly has launched the first payroll-deducted Lifetime Isa
These savings plan are particularly popular for younger employees as they allow access to savings to fund a deposit on a first home. Savings not used for this are then not accessible until the age of 60 – when they can be accessed tax-free.
Savers can contribute up to £4,000 a year into a Lisa from the age of 18 to 50. Rather than offer tax relief, savers get a 25 per cent contribution from the Government.
By using payroll deduction, employers have the option to make contributions on behalf of employees, as an additional savings vehicle to an employer funded pension contribution.
Smarterly points out that millennials are predicted to make up 50 per cent of the global workforce by 2020 and 75 per cent by 2025. With many struggling to get onto the property ladder, assistance in helping them achieve this goal is likely to be well received as part of a clear employee wellbeing strategy.
Smarterly corporate affairs and policy adviser Michael Johnson says: “With 16 million adults having less than £100 in savings, and over 50 per cent of the UK workforce borrowing money to pay for basic needs, we need more engaging propositions to turn the UK into a nation of savers.
Innovation is essential. 2015’s widely welcomed pensions freedoms facilitated considerable individual flexibility in retirement, but workplace schemes have been slow to personalise how they interact with the individual”.
Smarterly co-founder Phil Hollingdale adds: “There are clear advantages to offering LISAs in the workplace. Not only are they popular among employees, particularly the young, allowing contributions directly from net pay makes the savings process easy.
“Additionally, by offering a product that’s geared towards saving for a home, you can engage young people, get them into the savings habit and then allow them to continue saving for retirement later on.”