Two-thirds of UK adults aged between 18 and 40 have never heard of the Lifetime Isa, Money Marketing can reveal.
According to a You Gov survey conducted with Zurich, just 3 per cent of savers knew about the Lifetime Isa and planned to use it instead of a pension, while 17 per cent intended to use the Lifetime Isa alongside a pension.
Fourteen per cent said they knew about the Lifetime Isa but did not plan to use it, and 66 per cent had not heard about the initiative before taking the survey.
A group of 1,420 eligible savers aged between 18 and 40 were asked about the Lifetime Isa in the survey that questioned 4,157 adults overall.
Zurich retail platform strategy head Alistair Wilson says: “With two-thirds of eligible consumers saying they were unaware of the Lifetime Isa, this raises further doubts about what the scale of customer demand will eventually be. Like many other providers, we will be monitoring how the market develops so that we can respond appropriately.”
Read more: FCA wants risk warnings on Lifetime Isas
A Treasury spokeswoman says: “We announced the Lifetime Isa at Budget 2016. Since then we’ve been worked closely with the regulators, providers and personal finance journalists to ensure wider public awareness of the policy. As with other new products, we will continue to work with these stakeholders over the coming months.”
The Lifetime Isa goes live in April.
UK residents aged between 18 and 40 will be able to open a Lifetime Isa and pay in up to £4,000 each tax year, with contributions qualifying for a 25 per cent government bonus.
Savers can pay in and receive the bonus until they are 50 years old, and they are eligible to withdraw funds from the account to buy a first home worth up to £450,000.
Other withdrawals may incur a 25 per cent exit charge, including on growth, except in the first year of the product, 2017/18.
The FCA wants savers into Lifetime Isas to receive risk warnings about these penalty charges, as well as the implications of opting out of auto-enrolment to save into the product.
A Treasury impact assessment said in October that more than 200,000 people were expected to save into a Lifetime Isa in 2017/18.
However, other adviser research suggests that fewer than 10 per cent of advised clients may demand a Lifetime Isa.
Hargreaves Lansdown confirmed yesterday it would be launching a Lifetime Isa on April 6 that would include the same investment options as its other Isa products.
AJ Bell has said it intends to launch Lifetime Isa but have not confirmed dates for the launch. Scottish Widows is reviewing whether to offer the product.
A Scottish Widows spokesman says: “We are continuing to work closely with the regulatory bodies as part of their industry consultations around Lifetime ISAs and will review our participation when regulations are finalised.”
The full results of the MM/Zurich survey will be revealed in an upcoming edition of Money Marketing.