Monday 24 October 2016 3:10 pm

Many Britons have a considerable interest in taking out a Lifetime Isa

Londoners are keen to enrol in a Lifetime Isa (Lisa), with almost three-quarters wanting to use them to save for the future according to the latest research.

If they could, 72 per cent of residents under the age of 40 in the capital would open a Lisa, with over one-third (37 per cent) ready to open one straight away.

Although the trend is similar nationally, these figures do drop to 61 per cent and 23 per cent respectively.

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Expected to go live next April, Lisas are designed to help different people at different stages of their life. The tax benefits of them mean that some see them as an alternative to saving via a pension scheme with others using Lisas to put money away for their first property purchase.

They are attractive to many because for every pound you deposit up to £4,000 annually, the government will give you a 25 per cent top up if you are between the ages of 18 to 50, capped at £1,000 of benefit per year. 

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The nature of the product means that some experts have raised concerns about people using Lisas as a substitute for saving in a pension scheme. However the research, prepared by actuarial firm Hymans Robertson, suggests that the both products are not necessarily mutually exclusive.

Nationally, the majority of respondents (68 per cent) said they would save into Lisas as well as pensions. Only 18 per cent were prepared to redirect retirement savings to a Lisa.

"We need to move away from looking at pensions and Lisas as competing products," said Paul Waters, a partner at Hyman Robertson. 

One should not be at the expense of the other. Younger workers don’t see them as an ‘either/or’ decision. They see them as a product that could give a boost to their savings.

But they also appreciate the boost to savings you get through employer matching contributions in workplace savings. This is supported by the fact that most of those who would open a Lisa would still save more to their pension.

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The danger, according to some experts, is that some workers assume that current minimum contributions to pension schemes via auto-enrolment are not enough to sustain them in their old age. 

The likes of former pensions minister Steve Webb this summer called current minimum contributions "particularly disappointing".

Instead of saving additional cash to top up their pension scheme, people will put it into a Lisa with a view to buying property to supplement retirement incomes. Recent research by AJ Bell has indicated that unless people are prepared to invest in at least three houses, it makes more sense to invest in a pension scheme to fund old age rather than property.

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