The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.
After the ex-Chancellor George Osborne announced last year that a new ISA would be introduced in 2017, the Lifetime ISA is now here.
Admittedly, the financial services industry’s response has hardly been enthusiastic but over time, we expect a lot more interest.
In the meantime, we at Scottish Friendly have announced our own plans for the Lifetime ISA (LISA) market with our innovative new LISA Access option. Scottish Friendly’s unique take on the Lifetime ISA initially places the investor’s money in a Scottish Friendly My Choice (ISA) whilst providing the investor with a simple way of moving their money into a Lifetime ISA when they are good and ready.
This ‘ISA first’ route means that customers will have full access to their money without penalty but they will still be able to receive the full benefit from the government bonus of 25% of the investment when they are sure they are ready to commit to the terms of the LISA.
Scottish Friendly’s Commercial Director, Neil Lovatt, says: “I worry that, for those investing under £4000 a year, a direct investment in a Lifetime ISA is flawed. For the vast majority of these customers there is just no need to rush into a LISA; going in early only cuts these customers off from their money with no financial benefit. It’s often far better for them to use their ISA allowance and later withdraw and transfer it into a LISA when they are good and ready. You have to ask why would any such customers follow a LISA first’ strategy?”
“Scottish Friendly’s LISA Access option means that those investing under £4,000 a year will be just as well off using our solution,” says Neil. “Contrary to popular belief, for these clients, whilst their fund value is under £4000 it makes no difference if they receive their 25% government bonus today or in 5 years’ time, so there is often no need to rush. The important difference with our LISA Access option is that clients will have penalty free access to their money whilst they are waiting to move money into the LISA.”
Scottish Friendly’s My Choice (ISA) offers extremely affordable investments from just £10 a month or with a lump sum of just £100. Investments will be in a Scottish Friendly My Choice policy within which the investor can choose from a range of funds.
Tax treatment depends on individual circumstances. Tax law may change in the future. The value of the investment can go down as well as up and investors could get back less than the amount paid in. An Investment ISA should be regarded as a long-term investment, for at least five years.
No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.
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