Can you have a workplace pension and a lifetime ISA at the same time?

[Sammy900]

Hi

I have been thinking a lot about how best to save for my retirement. I have been paying into my workplace pension for 10 years and want that to continue (for another 21 or 28 years).

I would like the option of retiring at 60 if I can so alongside workplace pension I have looked into the government lifetime ISA to compliment the pension I already have...A lot of information on the net is about either/or but I definitely do not want to swop over...I was just wondering if I will be penalised in anyway for having both. Is this allowed? I wouldn't want the LISA to interfere with my workplace pension entitlement.

Anyone else looked into this?

I've got a workplace pension and a Lifetime ISA for the same reasons you've mentioned. I'm not aware of any issues with this but will watch this thread with you in case I've missed anything.

Yes, you can have both. They each have their own specific rules but have become very similar due to the 25% bonus on the ISA.

I've just rang the bank and they inform me that yes indeed you can have both at the same time to compliment each other. So good news :)

That is good news. Guess it makes sense that they should compliment each other so people have got options at 60. My LISA is with the Skipton BS and you've reminded me that I should keep building it up. I was focused on getting £4k in it last year to get the maximum bonus so should crack on this year. It should be a decent sum by the time I get to 60 in about 20 years.

Excellent but remember we can only pay into it until we are 50 - that gives me 11 qualifying years :) which I hope will give me the option of retiring at 60 if I want to .....unless they are naughty and increase the age you can take it to match state pension age at the time (nooooo)

OP if you are saving into a workplace pension via sal sac I would do the sums to compare before you save into a LISA. When I looked at this I was better off saving more into workplace pension than a LISA from a tax efficiency perspective. (Am assuming your workplace pension is a DC type)

Mintbiscuit

Thanks for that - I am going to meet up with the pensions people from work soon and discuss all of the options that are available. Would you mind explaining a bit more about how I could save in taxes with putting more into my work pension rather than a LISA (I haven't looked into any of this before now and it's all a bit of a minefield). The LISA is tax free.

One of the other main things attracting me to a LISA aside from the 25% bonus is that I can take it at 60, where as my workplace pension will be 67. So I really want to weigh up and discuss various options and penalties surrounding that.

Hi OP, apologies just seeing your last post now.

I’m making an assumption here that your workplace pension is a defined contribution pension (not final salary).

The LISA is tax free to withdraw from but you are paying out of your net salary I.e after paying tax and NI. Workplace pensions are often(but not always, so check with your employer) set up as salary sacrifice. Which means you are paying contributions from your PRE tax salary therefore you are saving tax and NI. PLUS you get tax relief (government tops up your pension contributions) by 20% if you are basic tax rate payer or 40%, 45% if higher tax rate payer. PLUS if you are not be taking advantage of full employer contribution matching you could be losing out on free money from employer. (Check what your scheme matching structure is if you haven’t already to make sure you are!). This equates to c.25% if not more compared to LISA.

DC pensions (including workplace ones) can be accessed from age 55. Not sure why you are saying 67 for your workplace pension? (Legislation changed in 2015). State pension might be 67, but your workplace is not dependent on this. This gives you earlier access than a LISA which is 60.

Withdrawal from a DC pension is taxable depending on your income tax bracket (note 25% of your pension pot is tax free though). You can withdraw your pension flexibly though (drawdown) and minimise tax payable that way.

Personally I’m not confident about the future of the LISA. It was George Osborne’s baby and I’m not sure if the current government are as enthusiastic! Options on the market are still pretty limited too.

more info at link comparing the 2. I would definitely have a chat with adviser or someone qualified to help you weigh up your options further.

www.unbiased.co.uk/news/pensions/lifetime-isa-vs-pension-the-showdown

Thank you mintbiscuit lots of really useful info there I'm going to copy and paste and take it to my advisor!