Longer term, though, the freeze does penalise younger savers looking to grow their wealth over time who had the foresight to start saving early.
The reduction in the Lifetime Isa withdrawal penalty from 25 per cent to 20 per cent was only meant to be a temporary measure to allow people experiencing financial difficulties during the pandemic to have to access their funds to help get them back on their feet.
While there’s still a penalty, the reduction effectively meant that only the government bonus was taken away – nothing more.
The penalty charge applied on Lisa savings contributions, as a deterrent to stop account holders from using funds for anything other than towards their first home or retirement, was always controversial.
The hope was the Government would maintain the reduced 20 per cent penalty charge, but that hasn’t transpired.
The decision seems a bit odd as the financial circumstances of those still reeling from the Covid pinch on their income won’t change overnight come the start of the new tax year.
FTA: Post-Covid, what would help younger people be able to save more?
MJ: The consumerist culture of today encourages people – young people in particular - to spend money on clothes, gadgets, holidays and cars instead of saving and investing.
The key is to find a happy medium: frugality, self-control, being prudent with your expenditure are underrated virtues.
In addition, education on the importance of savings and investing remains key – and this should start in the classrooms to help instill a savings culture from a young age. It’s so important because wealth gives you greater control of the lifestyle you want to lead.
There is a real need for financial education to empower people to make cogent decisions relating to their finances. I also think too many young people think investing is the preserve of the rich, but you can invest monthly from around £25.
FTA: Now we've Brexited (if that's now acceptable as a verb), are we likely to see a higher savings mentality as people seek to protect their own financial futures?
MJ: I’m not so sure. I don’t think being part of the European Union had any bearing on the UK’s savings culture. However, I do think that the pandemic has unwittingly sparked a renaissance of a savings culture in Britain.
While the dastardly pandemic has left many on the financial cliff edge, others have found themselves with more money in the bank, resulting from a dramatic dip in their expenditure on travel and outdoor entertainment because of strict lockdown restrictions.
