• 286,000 Lifetime ISA accounts have been opened since the savings product launched, AJ Bell Freedom of Information request reveals
• Based on average subscriptions in 2017/18 (£3,114) that equates to total LISA investments worth over £1.4 billion*
• When 25% bonuses are included this figure now likely tops £1.8 billion
• Government could supercharge the LISA by slashing the unfair exit penalty and extending making it available to savers of all ages
Tom Selby, senior analyst at AJ Bell, comments:
“The Lifetime ISA has been that rare thing in financial services: a useful, popular new product.
“Despite the restrictions in place on those who invest and the relatively low number of providers who have come to market to-date, almost 300,000 accounts have been opened since April 2017.
“When you combine the amount invested with the Government bonuses added, we reckon almost £2 billion has now been invested through LISAs, providing a rocket boost for first-time buyers and a useful top-up to traditional pension savings too.
“With the Help to Buy ISA due to be abolished in November this year it is likely the big banks and building societies will enter the fray.
“While the LISA now has a firm foundation in the UK savings landscape, the 25% Government-imposed exit penalty for early withdrawals is unnecessarily harsh and could leave investors with less than they originally contributed.
“Reducing this charge to 20% of the amount withdrawn – in effect returning the Government bonus - would be fairer and make explaining LISA’s benefits more straightforward.
“The current age restrictions, which bar anyone aged 40 or older from investing in a LISA, should also be revisited as part of the Government’s drive to solve the self-employed savings crisis.
“There are now around 5 million self-employed people in the UK, the majority of whom have little to no retirement savings at all. Creating attractive options for this growing section of the workforce is essential if we are to avoid huge problems further down the line.
“Lowering the exit charge and scrapping the age restrictions would supercharge the LISA for future investors.”
*assumes the same average investment in 2018/19 made by both new and existing LISA holders