Lifetime Isa Reform Criticized as Too Slow by MPs
A group of lawmakers has expressed dissatisfaction with the pace of reform for Lifetime Isas (LISAs), a savings product designed to help individuals save for retirement or purchase their first home. The criticism comes ahead of the November Budget, with some MPs questioning whether LISAs are a good use of taxpayer money.
According to a report by the Treasury Committee in June, LISAs were being mis-sold and did not suit everyone. The committee found that only 6% of eligible adults had opened a LISA account since its launch in 2017, despite about 1.3 million accounts still open. The government's response to the report was deemed insufficient by MPs.
"The government has taken some steps towards improving the Lifetime ISA, but I do not believe they have gone far enough," said Dame Meg Hillier, who chairs the committee. "The Lifetime ISA is a confused product that requires reform."
LISAs allow individuals under 40 to save up to £4,000 per year, with the government topping it up by 25%. The product was launched in 2017 under the then-Conservative government and has been criticized for being overly complex.
Some MPs have questioned whether LISAs are a good use of taxpayer money, given that they are forecast to cost the government £3 billion over five years. "We need to see more significant changes to make LISAs work better for people," said an anonymous MP.
The criticism from lawmakers comes as the government prepares for the November Budget. The Treasury Committee has called on ministers to do more to reform LISAs and ensure they are suitable for everyone.
Background: LISAs were introduced in 2017 as part of a broader effort to help individuals save for retirement or purchase their first home. However, the product has been criticized for being overly complex and mis-sold to some individuals.
Additional perspectives: Some experts have suggested that LISAs could be improved by simplifying the rules and making it easier for individuals to understand how they work. Others have argued that the product is too limited in its scope and should be expanded to include more benefits.
Current status: The government has yet to announce any significant changes to LISAs ahead of the November Budget. However, MPs are expected to continue pushing for reform in the coming weeks.
*Reporting by Bbc.*
