Seventy per cent of large employers are considering offering a Lifetime ISA (LISA) or Workplace ISA (WISA) through the workplace within the next five years, according to a survey by Willis Towers Watson.
This includes 13 per cent who say they are “extremely likely” or “very likely” to do so.
In most cases, employers are also examining broader Workplace ISA (WISA) offerings, which would cover all employees rather than just those eligible to save in LISAs.
Furthermore, 50 per cent of organisations anticipate letting employees exchange employer pension contributions for cash which they could choose to save in a different vehicle, or for other benefits. However, only 11 per cent said that the full pension contribution would be exchangeable: the rest expect to retain a pension-or-nothing element to their reward package.
Minh Tran, senior consultant at Willis Towers Watson, says: “Despite a slow start on the provider side, our research suggests the LISA and WISA are set to become an integral part of workplace savings in the very near future and that a clear trend of early adopters has started to emerge.
“Employers tell us that a key driver for wanting to offer a LISA or 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. LISAs and WISAs are set to appeal to employers and employees, from graduates and millennials, through to those with family commitments and individuals who may be affected by the Annual Allowance or Lifetime Allowance.
“This highlights the importance of establishing new workplace saving vehicles that interact seamlessly with the employer’s reward design, including existing pension plans and other benefit arrangements. When designed, communicated and delivered to employees in an intuitive and simple way, employers will find the LISA and WISA may cultivate a better culture of savings and improve the overall financial wellness, employee appreciation and engagement of all age groups, without necessarily increasing employer costs.”