"For these clients, whilst their fund value is under £4,000 it makes no difference if they receive their 25% government bonus today or in 5 years’ time"
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 ready to commit to the terms of the LISA.
Scottish Friendly’s Commercial Director, Neil Lovatt, said: “I worry that, for those investing under £4,000 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?
“Our LISA Access option means that those investing under £4,000 a year will be just as well off using our solution. Contrary to popular belief, for these clients, whilst their fund value is under £4,000 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."
