More than a third (39%) of employer respondents are somewhat likely to provide staff with access to a Lifetime individual savings account (Lisa) over the next five years, according to research by Willis Towers Watson.
Its 2016 UK budget survey report, which surveyed 130 employers, also found that 30% of respondents are not at all likely to offer a Lisa to employees in the next five years, 18% are likely, 8% are very likely, and 5% are extremely likely to do so.
The research also found:
- 59% of respondents think the government will eventually stop pension contributions coming from pre-tax income.
- 64% of respondents believe the introduction of the Lisa will divert employee savings from retirement to housing, and 45% think that employees will now look on pension schemes less favourably as a result of the Lisa being introduced.
- 37% of respondents are somewhat likely to provide access to a corporate individual savings account (Isa) in the next five years, compared to 40% that are not at all likely. A further 14% are likely to provide a corporate Isa to staff, and 4% and 5%, respectively, are extremely or very likely to do so.
- 59% of respondents believe a pension scheme is a better way to save for retirement than a Lisa.
- 79% of respondents do not allow employees to exchange their pension contributions for cash or other benefits.
- 39% of respondents expect to provide employees with the opportunity to exchange part of their pension contributions for cash or other benefits in five years’ time, and 11% plan to allow employees to exchange their complete pension contribution.
- 55% of respondents name attraction and retention as the main objective of their pension plan, 26% state the main objective of the scheme is to provide an adequate income in retirement, and 8% feel that employee appreciation is the main objective.
Minh Tran, senior consultant at Willis Towers Watson, said: “Employers tell us that a key driver for wanting to offer a Lisa or [workplace Isa (Wisa)] is to provide a competitive reward package to attract and retain the right employees. They are embracing the evidence that a diverse workforce has a wide range of financial needs and, therefore, the Lisa and Wisa in conjunction with existing pension plans can help to address employees’ short, medium and long-term saving needs.
“Though aimed at different age groups, and targeting different financial needs within the workforce, it is clear that many employers are intending to offer a greater level of personal choice and flexibility for employees. This can address different financial priorities such as buying a first home, paying down debt, and building up general savings, in addition to saving for retirement."
