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Lifetime ISAs can be a useful addition to a wellbeing programme, particularly when it comes to engaging younger workers.
Increasingly, employers are seeing the benefits of helping staff get on top of their finances; aiding with retirement, decreasing stress, or simply wanting to do the right thing.
For most people, except those who can get by on the state pension alone, employer pension provision forms the bedrock of a healthy retirement.
And businesses that don’t help their workforce save for the longer-term are likely to face trouble down the line.
The problem with pensions saving
Since the introduction of auto-enrolment, most people are saving something for retirement. However current contribution rates are insufficient.
The average person needs to save £260,000 to enjoy a basic income when they retire. This climbs to £445,000 for non-homeowners.
But given the myriad of financial pressures facing millennials, there are concerns that as contribution rates rise, more might opt out.
Thinking outside the box
These conflicting pressures have left smart employers hoping to reshape financial wellbeing strategies. One option, is to offer a Lifetime ISA (LISA).
LISAs can be opened by anyone under the age of 40. Like traditional ISAs, savings can be withdrawn tax-free, but employees will also receive a government top up of 25% on everything they put away up to £4,000 a year.
The money can only be used for a first-time house purchase (up to £450,000) or as a retirement fund, which can be accessed from age 60.
You can continue to receive the government boost on savings until age 50. So an employee who opens a LISA at 18 and saves the maximum, receives £32,000 from the government.
Clearly, for young people who are worried about property ownership, it’s an attractive proposition.
A great workplace benefit
The majority of LISAs are purchased in the retail market, but there are clear advantages to offering them in the workplace.
Additionally, by offering a product geared towards buying a home, you can get younger staff into the savings habit, and then allow them to continue saving for retirement later on.
Taking all that together, if a LISA is delivered alongside a strong financial education programme, it’s easy to see the path towards a happier, more economically stable workforce.
Happier workers means better business results
Helping employees on the journey to financial wellness also leads to better commercial results. Helping employees manage finances lessens these risks, and thus reduces the associated business costs. It can also promote better work life balance and improves staff retention.