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) 
Contribution 4000 4000 4000 4000 4000
Tax relief 1000 1000 2000 1000 2000
Employer matching 5000 6000
Tax free allowance (at 55) 1250 1500 2500 3000
Tax free allowance (at 60) 5000
Taxable assuming BRT in retirement 3000 3600 6000 7200
Total 5000 4250 5100 8500 10200

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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