Lifetime Isa launches but major banks rule out offering it to customers

Will you be getting a Lifetime Isa? Picture: Pixabay.
Will you be getting a Lifetime Isa? Picture: Pixabay.

Lifetime Isas launch on Thursday - but many major high street banks have ruled out immediately offering one.

The accounts, also known as Lisas, can be opened by people aged between 18 and 39 to save for their first home, or their retirement, in the same pot.

They can put away up to £4,000 each year and receive a Government bonus of up to £1,000 a year on their contributions until they turn 50.

Funds can be withdrawn tax-free to buy a first home or saved for later in life.

The total amount savers can put into an Isa in a year will also increase on Thursday from £15,240 to £20,000 - as the new tax year starts.

While some providers have confirmed their plans to launch Lisas, many major high street names have said they are reviewing their position.

Hargreaves Lansdown, Nutmeg and the Share Centre have said they will launch investment Lisas on Thursday. Skipton Building Society will offer a cash Lisa from June and will give further details closer to launch.

Chris Hill, incoming chief executive officer at Hargreaves Lansdown, said: "We have a huge shortfall when it comes to saving and investing in this country, and the Lisa will be a great way to encourage younger people to put money aside for their future."

He said feedback from clients suggests there is "considerable interest" in the Lisa.

Several providers have said they are still considering their plans or have no plans to offer a Lifetime Isa.

Lloyds Banking Group said in a statement: "We are a long-standing advocate of the simplicity of Isa wrappers and the tax benefits are valued by investment and savings customers.

"Whilst we will not have a Lisa on the launch date, we will continue to continue to review our product range plans and the role of Lisa within that."

A Barclays spokeswoman said: "We are continuing to review the recently-issued final Lifetime Isa rules and guidance, and therefore will not be launching a Lifetime Isa in April."

An RBS/NatWest spokesman said: "At this time we will not be offering the Lifetime Isa but continue to offer our help to buy: Isa and a range of savings and investment options."

Santander said: "At this point in time Santander has no plans to launch the Lifetime Isa.

"We have an extensive range of Isas already available and we will continue to keep our position under review."

HSBC said: "We are continuing to work through the details of the product."

Nationwide Building Society has said it has no plans to offer a Lifetime Isa product.

Over their lifetime, people saving into a Lifetime Isa could potentially get a maximum bonus of £32,000.

Savings can be used to buy a first home or used for other purposes after the saver reaches 60.

Generally, savers withdrawing their money early for reasons other than buying their first home face withdrawal charges.

Lifetime Isas were unveiled during the Budget in March 2016 by the then chancellor George Osborne.

The Treasury has said it expects the market to continue to grow, with more providers coming on board as products are developed.

Some experts have raised concerns that some savers may ditch their workplace pension in favour of saving into a Lifetime Isa.

The Pensions and Lifetime Savings Association (PLSA) found 40% of 18 to 39-year-olds who are paying into a workplace pension say that if they start saving in a Lisa they will stop saving into their pension.

Nigel Peaple, deputy director defined contribution, lifetime savings and research at the PLSA, said: "If this were to happen, these savers could miss out on up to two decades of employer contributions, making it even harder for them to save adequately for retirement."

Former pensions minister Baroness Altmann said savers can receive much more than the 25% bonus offered by a Lisa - from the employer contributions and tax relief they would get in a pension.

She said: "Pensions will usually give you far more than the Lifetime Isa on day one. It's just that this is not properly explained when you get your pension statement, so most people don't realise it."