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) |
|Tax free allowance (at 55)||1250||1500||2500||3000|
|Tax free allowance (at 60)||5000|
|Taxable assuming BRT in retirement||3000||3600||6000||7200|
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.