Workplace Isa 'needed to boost savings culture'
A Workplace Isa should be introduced as part of efforts to boost the savings culture, according to the Centre for Policy Studies.
The Workplace Isa could sit alongside the Government's plans for a Lifetime Isa, a report from the think tank argued.
Lifetime Isas are set to be available by April 2017. These accounts can be opened by people aged between 18 and 40, and any savings they put in before their 50th birthday will receive an added 25% Government bonus. The new Lifetime Isa accounts are intended as a way for younger people to save for their first home, and their retirement, in the same pot.
Michael Johnson, author of the Centre for Policy Studies report, said a Workplace Isa should form part of the Government's drive to automatically place people into workplace pensions, which would help to discourage people from opting out.
Workplace Isas should be open to all auto-enrolled employees under the age of 40, he said. Employer contributions, taxed at the employee's marginal rate, could be paid into a Workplace Isa until the age of 50 and they should be accompanied by the same 25% Treasury bonus as that intended for the Lifetime Isa.
Under the suggested scheme, withdrawals from the Workplace Isa would not be allowed until the age of 60 and thereafter they would be tax-free.
The report suggested that to simplify Isa saving, people could save into an "Isa warehouse" as a single place for their money.
The Isa warehouse could include various savings pots such as Help to Buy Isas, stocks and shares Isas, Lifetime Isas, cash Isas and Workplace Isas.
Mr Johnson, who mooted the idea of a Lifetime Isa in 2014, said the Workplace Isa suggestion could help foster "the broad-based savings culture that the UK so desperately needs".
He said: "The majority of the population should be encouraged to set themselves one simple goal at the point of retirement: to be a debt-free home owner."