For most people, a workplace pension where an employer offers a matching contribution is likely to be better. There are some ‘soft’ benefits of a Lifetime ISA (LISA), for example the availability of early access with penalties, but looking at the tax position, the options speak for themselves.

LISA Pension (BRT)  Pension(HRT)  Pension + Matching (BRT)  Pension + Matching (HRT) 
Contribution40004000400040004000
Tax relief10001000200010002000
Employer matching50006000
Tax free allowance (at 55)1250150025003000
Tax free allowance (at 60)5000
Taxable assuming BRT in retirement3000360060007200
Total500042505100850010200

Key: BRT/HRT – basic or higher rate taxpayer; all figures / £

The nature of this analysis is simplified, so I have ignored growth and assumed that even a higher rate taxpayer will be a basic rate taxpayer in retirement; we find this is commonly the case but care should be taken not to take the general summary above to apply to your own situation.

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