Commenting, on the introduction of the Lifetime ISA, Patrick Bloomfield, Partner at Hymans Robertson, the leading pensions and benefits consultancy, said:

“It’s interesting that the Chancellor said he would not let the next generation pick up the bill for decisions made today. It could be fair to say that the introduction of the Lifetime ISA is not putting the next generation’s needs first. We’ll be enjoying the tax take that would have gone to our children and grandchildren as the Government will receive tax and National Insurance earlier. Essentially the Government will be taking 15p in the £1 up front.

“It could also be a forerunner to the end of pensions as we know it. It’s essentially a new pension regime through the backdoor and the first step on the path to a pensions ISA for all.

“The under 40s currently make £17bn of contributions into DC schemes. If everyone made the switch to a Lifetime ISA, and they followed the same behaviours of ISA investors, putting 80% into cash, then that could be several billions pounds lost in investment returns every year.”

Discussing what this means for the individual he said:

“If the introduction of the Lifetime ISA encourages greater saving amongst younger generations, due to the simplicity of the message around you put in £4, the government will put in £1, then that’s great. However,  if LISA savings replace pension savings, over the long-term that could be bad for individuals.

“Opting out of workplace pensions means losing your employer’s contribution into your scheme. And if the money is kept in cash, then there’s also the loss of investment returns. If they also access the flexibility, they could lose 25%.

“What is clear is that it will need strong governance as ultimately there is massive scope for poor choices to be made.

“Younger workers will need help with the complex decisions they now have to make. Employers are best placed to provide that help. Individuals say they look to their employer for support as much as to the Government and more than any other sources of advice when it comes to long-term savings. The FAMR earlier this week recognised that the workplace is central to closing the advice gap for saving. Yet creating a competing individual product to pensions potentially takes savings and the guidance that could come with that, out of the workplace. This is an example of disjointed policy.

“As with pension freedoms, younger generations are now faced with more complex choices. As with those approaching retirement, younger generations will need more support around the decisions they have to make as there is definitely scope for poor choices to be made.