Cushon supports calls for permanent reduction of LISA withdrawal charge

Cushon has announced it is supporting calls for a permanent reduction of the Lifetime ISA (LISA) withdrawal charge, which is due to increase in April 2021.

In May last year, the Treasury announced a temporary reduction in the charge to 20% to give savers respite during the COVID-19 pandemic.

This is due to increase back to 25% from 6 April 2021, but Cushon believes the charge should have been set at 20% from the start and is urging the government to stop penalising those who need to access their savings.

The fintech workplace pensions and savings disrupter revealed it is backing a petition launched by Hargreaves Lansdown, that calls for a permanent reduction to the LISA withdrawal penalty from 25% to 20%. The petition currently has over 6,000 signatures.

Cushon said the 25% charge means that the government is claiming back the initial bonus and also levying a 6.25% penalty on any withdrawals made before age 60 not being used for first time home purchase.

“At 25% the charge is unfair, risks confusion and ultimately deters savers, which is madness at a time when we need to be actively encouraging saving, not putting people off,” commented Cushon head of proposition, Steve Watson.

“We don’t always agree with our competitors, but when it comes to issues that can make a big difference to the lives of savers – we’ll join our peers and do everything we can to push Government to do the right thing.

“The LISA withdrawal charge is one that we feel particularly strong about and we stand together with Hargreaves Lansdown to ask that the 20% charge be maintained permanently – it’s the level that should have been in place right from the start.”

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