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According to an influential committee of British MPs, who questioned whether the tax -free savings product subsidized the wealthier buyers of taxpayers at the expense of taxpayers, lifelong individual savings accounts increase the risk of people to make poor financial decisions.
The selected committee of the House of Commons questioned the “double purpose” of life IsasIt makes the product “complex and increases the risk that consumers select unsuitable investment strategies”.
The report published on Monday, as the government as part of a more comprehensive plan to encourage more people, to invest in stocks and bonds, to encourage comprehensive reforms for the market.
Dame Meg Hillier, Chairman of the Treasury Committee, said it supported the goals of lifelong ISA to help first buyers, and those who save early on retirement asked whether it was “the best way to spend billions of pounds over several years” in order to achieve these goals.
“We know that the government holds the ISA reform, which means that this is the perfect time to judge whether this is the best way to help people who need it,” said Hillier on Monday in an explanation.
George Osborne hired the life -long individual savings account (Lisa, as Chancellor in 2016. It enables people aged 18 to 40 years to save up to £ 50 with a bonus of 25 percent.
It can be picked up tax -free to buy a first house worth less than 450,000 GBP if he turns 60 or when the saver is terminally ill.
Data from HM Revenue & Customs shows Lisas are popular with belonging buyers of buyers: 56,900 people who acquire their first property in 2023-24.
Almost 1.4 million Lisa accounts were open on April 2024. However, some industry experts were adapted to unfair, over -comprised and not in accordance with rising real estate prices.
The product has remained relatively unchanged in the eight years since its introduction, but only each of seven of all ISA providers has decided to offer consumers. Charlie Nunn, Managing Director of Lloyds Banking Group, has covered the bank’s unmanagement to largely deliver it to its complexity.
“We are very concerned about it from complexity and behavioral perspective,” he told the Finance Committee. “If you want to save for retirement, there are other better options.”
The report describes saving for the purchase of a home and retirement as a “contrasting goals” and states that investing can increase the risk of consumers for different duration, since those who invest in the long term, such as pensioners, are more likely to benefit from higher risks and return systems such as stocks.
“This takes care that people may not optimize their old -age provision of what they could leave with a smaller pot in the future,” it said.
The report also criticized the 25 percent indictment for so-called, non-authorized withdrawals, which means that savers lose the government bonus as well as 6.25 percent of their own money and their inclusion when determining the authorization for universal loans.
In the 2023-24 tax year, almost 100,000 were punished, which cost savers more than 75 million GBP.
The MPs wrote that it is “nonsensical” to treat a pension product differently than others, and recommended that the government either compensate for it or tell people that a lifelong ISA is an “inferior product” for everyone who may claim universal credit.
“Such warnings protect themselves from the fact that savers are sold products that are not in their best financial interests, which could certainly be wrong sale,” they wrote.
