use this calculator to work out which is best for you

Tens of thousands of people have opened new Lifetime Isas, or “Lisas”, since they launched in April 2017. But is it better for you to save into a pension or this new type of  Isa?

As with normal Isas there are cash, and stocks and shares versions of the Lifetime Isa. A Lifetime Isa has a 25pc Government bonus – you can save up to £4,000 a year into a Lifetime Isa, which becomes £5,000 with the bonus.

Only people aged between 18 and 40 can open a Lifetime Isa account, and withdrawals are penalty free if used for a house purchase or over the age of 60.

Comparison with pensions are tricky, because while everyone is entitled to the 25pc bonus on the Lifetime Isa, the bonus on a pension, known as “tax relief”, is related to your income tax bracket. Some employers also permit staff to use “salary sacrifice” arrangements for pension contributions, which provides extra tax savings.

Use Telegraph Money’s calculator, designed by financial technology firm EValue, to see whether it makes more financial sense for you to save into a pension or a Lifetime Isa to fund your retirement.

How to use the calculator

  1. Click the wheel in the top-left hand corner to open settings. 
  2. Input the details of your company work scheme, click the ‘i’ icon for more detail on this. If you select ‘personal’ under ‘pension type’ you can compare a personal pension with a Lisa.
  3. Input your salary, what you expect your income to be in retirement and how much you are currently contributing to your work pension, you can put 0pc is you are contributing nothing.
  4. Hit ‘calculate’
  5. Click ‘breakdown’ for more details

What the calculator shows you

To keep comparisons simple, the calculator models the return you would make on a £100 contribution to a pension and a Lisa. It shows how this would translate into income – remember while Isa income can be withdrawn tax free, pensions are taxed at your marginal rate of income tax.

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