Nearly a third of under-40s will cut back on pension saving and instead put money into the Lifetime ISA (LISA), which launched last month, according to research from MetLife.
Almost a quarter (23%) of under 40s said they would reduce the amount they were investing in their pension, while roughly one in 10 (9%) said they actually planned to leave their workplace pension scheme to concentrate on saving into their LISA.
The survey, which canvassed the views of 1,071 employed adults aged 18 and over during February 2017, also found one in five (21%) members of the same demographic admitting they had not heard of the savings product.
Separate research from MetLife, meanwhile, found more than two-thirds (69%) of advisers are concerned the launch of the LISA could deter young savers from investing in pensions - potentially resulting in a two-tier system for retirement planning.
Hargreaves Lansdown is among a handful of providers to have already launched the product. In the first month, 13,319 LISA accounts were opened with the firm, almost a fifth of which were opened by individuals aged 39.
The LISA is a savings product open to anyone aged between 18 and 40. Individuals are able to save up to £4,000 a year tax-free into the account and benefit from a 25% government bonus on top. The money saved can either be spent on a house or pension but incurs a 25% exit penalty if used for any other purpose.
‘Worrying' if pensions ditched
MetLife wealth management director Simon Massey said: "It is very welcome that the government is encouraging saving and the LISA offers generous bonuses, but it is worrying if people are going to ditch pension saving in favour of LISAs. Pension savings attract tax relief and employers are duty-bound to top up contributions."
He added: "People have limited amounts they can afford to save but it should not be a case of giving up on pensions for LISAs."
Hargreaves Lansdown chartered financial planner Danny Cox said: "The LISA may not be widespread in terms of providers yet but the demand from savers for the new product is clearly there.
"The new account builds on the success of the ISA franchise with a generous government bonus, so it is little wonder it's proved popular."
MetLife's research also found almost two-fifths (39%) of under-40s saying the LISA would not have any impact on their long-term saving plans. More than half (56%) admitted, however, they found the ISA savings options confusing.
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