Emerging LISA future rules

eskbanker

I imagine ISA managers will ideally want to abolish the HTB/LISA products altogether rather than carrying around the burden of a limited customer base without growth prospects

Since HTB is already going to die off anyway in 2029 (contributions) and 2030 (use), it would surprise me if the government did anything there, but yes, it's true that ISA managers are important stakeholders as well as ISA holders and the government, so I imagine you're right that there'll be industry reluctance to continue to expand the portfolio of different schemes.

For the retirement-intentioned, an option to merge into a SIPP may not be the worst option

Have you come across anything credible that suggests that there's any intention for this cohort to be given an alternative option to LISA?

intalex

Have you come across anything credible that suggests that there's any intention for this cohort to be given an alternative option to LISA?

Nothing, just my instinct from having my SIPP and LISA sitting side-by-side with identical investments…

Leew89

If current holders are allowed to continue paying into them indefinitely (i.e. up to 50) my worry is as a 'legacy' product platform fees will be hiked.

Would other providers want to allow transfers in on a legacy product? Could end up being trapped.

No idea how likely it is but a possibility.

saajan_12

https://forums.moneysavingexpert.com/discussion/comment/81862642#Comment_81862642

I can..

• Pensions are taxed upon withdrawal, while LISAs can be drawn in full, leaving retirement LISA holders much worse off.
• Pensions have an (on and off) lifetime limit from which it will be impossible to carve out former LISA contributions following years of growth and account changes.
• Pensions have an annual limit, which would have to be raised during a transition. However this could take many years (from seeing the HTB transition) which could be administratively painful.
• Pensions come from untaxed income, so can't be aggregated with LISA money (for higher rate tax payers they received much less than the tax paid).

masonic

https://forums.moneysavingexpert.com/discussion/comment/81867650#Comment_81867650

The limited choice and issues being able to transfer once over the age of 40 means many of us are already semi-trapped. Fee hikes are happening across the landscape right now, but, touch wood, nothing punitive on LISAs specifically. Ultimately it would be hard to justify how a selective hike would be justifiable under the consumer duty.

Leew89

For those who haven't already seen, Dodl offering fee free on LISAs for a year if a minimum of £1000 is deposited:

https://goodmoneyguide.com/investing/dodl-lifetime-isa-reivew/

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81876532#Comment_81876532

When Dodl's annual charge is already only 0.15%, with a minimum £1/month, the offer would only save £12 for LISAs of up to £8K - every little helps and all that, but it's not exactly life-changing!

Leew89

https://forums.moneysavingexpert.com/discussion/comment/81876952#Comment_81876952

Indeed. I was thinking more for transfers, e.g. from HL. Cheaper eventual fee plus a year free 👍 If people are happy with the limited options.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81877541#Comment_81877541

Yes, if the comparison is between Dodl and more expensive competitors then Dodl will naturally come out on top without any special offers, but if the comparison in the offer is cheaper Dodl terms versus their normal ones then the incremental offer benefit is much more limited.

Alexland

https://forums.moneysavingexpert.com/discussion/comment/81877541#Comment_81877541

Once the LISA gets big enough then even Dodl's 0.15% looks expensive compared to holding an exchange traded asset and benefiting from capping on HL or AJ Bell's main platform.