Showdown: Lifetime ISA v. Pension

There is going to be a showdown between Pensions (red corner) and the New Lifetime ISA (blue corner).

People will have decide -- when they have some cash to save -- which is the best to use. They might not be able to afford both.

So here are the pluses and minuses...

Pensions

Pluses
Up front tax relief
Employer contribution
Tax free lump sum when you retire
Can use for pension from age 55

Minuses
Can't dip in to the money while saving
You pay income tax on your pension when you take it

Lifetime ISA

Pluses
25% top up bonus when you pay in
Can use to help buy home (or if have terminal illness)
Can dip into your contribution
The money is tax free to use when you retire

Minuses
No tax relief on contributions
Have to wait till 60, not 55, to use for retirement
5% charge if dip in
Have to be under 40 to open