Incentive to save
However, Jon Greer, pensions expert at Old Mutual Wealth said that although Isa “leaves young people uncertain about where to invest”, he said the exit charge acts as a good incentive for savers to use the product to either buy a house of for pension savings.
“The view that the exit charge is at odds with the FCA’s charge cap is too simplistic. The exit penalties the FCA were concerned about were those levied by providers and schemes which influence a person’s ability to access pension freedoms.
“The penalty on the Lifetime Isa is an incentive to use the product for what it was intended for – a house purchase or to be accessed from age 60. The 25% early withdrawal charge shares more in common with unauthorised payment tax charges that apply to pensions, rather than the FCA/DWP charge cap,” he said.
