Monday 5 December 2016

British chancellor introduces new life-time savings scheme for under-40s to save for pension

Published 16/03/2016 | 17:29

Britain's Chancellor of the Exchequer, George Osborne, holds up his budget case for the cameras as he stands outside number 11 Downing Street
Britain's Chancellor of the Exchequer, George Osborne, holds up his budget case for the cameras as he stands outside number 11 Downing Street

THE British chancellor of the exchequer has introduced a new life-time savings scheme designed for people under the age of 40 to save for a pension.

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In the UK’s budget George Osborne introduced a new lifetime individual savings accounts which will see the government there putting in £1,000 for every £4,000 saved.

This is similar to the SSIA (special savings incentive account) that operated here at the start of the century which proved hugely popular.

SSIA accounts were available to open between May 2001 and April 2002, and featured a state-provided top-up of 25pc of the sum deposited. Some €14bn was saved in SSIAs.

Now in Britain those between the ages 18 and 40 will be able to open an account and save up to £4,000 a year until age 50.

Contributions into the lifetime ISA will receive a bonus of 25pc - up to £1,000 a year.

Funds from a lifetime ISA can be used to buy a first home at any time from 12 months after the account is opened and be withdrawn from the age of 60.

Mr Osborne said the savings and bonus can be used towards a deposit on a first home worth up to £450,000 across the country.

Individuals will be allowed to withdraw the savings at any time before they turn 60 for any other purpose but will lose the government bonus, but will also have to pay a 5pc charge on the remainder.

After an individual reaches 60 they can take out all the savings tax-free.

Mr Osborne said: “With the new lifetime ISA you don't have to choose between saving for your first home or saving for your retirement.”

During the general election Labour proposed a save-to-buy scheme for first-time buyers that could see people get up to €6,000.

Fianna Fáil proposed to assist first-time buyers with a saving scheme that offered €1 for every €5 saved up to a limit of €20,000.

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