View more on these topics

Industry hails minimal withdrawals as Lisa turns two

Figures confirm that people are investing for the medium and long term, as intended

Pension providers have hailed the success of the Lifetime Isa as the product approaches its second birthday, with latest figures showing minimal withdrawals to date.

The product went live in April 2017, and offers a 25 per cent government bonus on savings of up to £4,000 a year for those looking to fund their first home purchase or retirement.

The government agreed to waive the exit penalty of 25 per cent for non-qualifying withdrawals in the first tax year. This would have applied to the total pot, not the initial contributions, meaning savers could have been left with an effective loss.

Money Marketing approached a range of Lifetime Isa providers for an indication of how many clients had decided to pull their Lisa savings at this early stage, and the level of exit penalties that the government could have taken without the waiver. Hargreaves Lansdown confirms that of the nearly 50,000 Lifetime Isa accounts it has set up, non-qualifying withdrawals have occurred on less than 1 per cent.

AJ Bell reports that only 40 customers withdrew and closed their Lisa before 5 April 2018. These clients would have forgone the government bonus, but would also have avoided the exit penalty.

An AJ Bell spokesman says: “The Lifetime Isa has been designed for people to save for a deposit on a first home or to supplement their retirement savings. Even if using it for the shorter-term purpose of a house purchase, it is still likely to be a medium-term investment given you can only save a maximum of £5,000 a year, including the government bonus.

“You would, therefore, expect limited early withdrawals, particularly given that the early exit penalty that now applies is overly punitive.  Even in the first year, when the exit penalty didn’t apply, it is no surprise to see limited withdrawals because investors would have gone into the product with a medium- to long-term objective in mind and that is absolutely the right approach.”

Skipton declined to comment on the basis the figures were commercially sensitive. Moneybox also declined to give an answer. Transact and The Share Centre did not respond to requests for comment by the time of publication.

Nutmeg said it could not provide data because once a customer has closed their Lisa with it, and they are no longer a client, the firm does not keep any data about them or their account size.

HM Revenue and Customs was able to provide data that shows 166,000 Lisa accounts were opened in the 2017-18 tax year.

The original target the government outlined was for 200,000 accounts to be opened.

The total subscribed was £517m, meaning the average amount saved was around £3,100. However, HMRC did not provide details on withdrawals.

The Treasury was also unable to provide any further information on the tax take from the product.



State pension court showdown set for summer

A judicial review about changes to the state pension age for millions of women born in the 1950s will take place from 5 to 6 June. The Department for Work and Pensions has confirmed that last November’s decision by the High Court to grant permission for a judicial review will go ahead in the summer. […]


What’s stopping advisers selling protection?

Leading financial planners have given a host of tips for advisers looking to bridge the protection gap with clients. In the latest episode of the Money Marketing podcast, this week in association with Royal London, Addidi Wealth financial planner Anna Sofat, Richmond House director Ian Jenkins and Royal London business development manager Vincent O’Connor sounded […]

Are default drawdown pathways a good idea? Industry heavyweights weigh in

With the FCA today setting out new rules for non-advised consumers entering drawdown to make sure they get better outcomes, is the regulator right to set up a number of default investment pathways? Interactive Investor head of personal finance Moira O’Neill Cash is king for a significant number of consumers, but today’s FCA proposals suggest it […]

Pension - thumbnail

Engaging millennials: Top five tips

By Jamie Clark, Business Development Manager Our latest research looks to understand the key influences on millennials’ future long-term pension savings. Here are our top five takeaways to consider when developing a strategy for advising them. 1. Every millennial is different. One thing that came through loud and clear in our research was that pigeon-holing […]


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. Pah! Of course minimal withdrawals, have you seen the penalties?

  2. Hailed the success?
    How many were taken out versus forecasted demand?

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm