Nearly 75 per cent of Lifetime Isa (Lisa) customers are using their accounts to save for retirement, according to research from Hargreaves Lansdown.
According to the study of 500 customers, 75 per cent of those who responded said they use a Lisa to save for retirement, 8 per cent said they use one to save for a home while the rest of the people said both.
When asked why they had a Lisa, 25 per cent indicated it was a tax-efficient choice because they didn’t have employer contributions to their pension.
One in five people claimed they had received all of their employer’s pension matching and were using a Lisa to save the rest of their money.
When asked why they didn’t have a Lisa, 52 per cent indicated they were too old to be eligible. One in every five people had no idea what a Lisa was and 6 per cent assumed they were only for first-time buyers.
Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey says: “Five years after its introduction the Lisa has come of age with 100,000 HL clients making use of them. Saving for retirement was the overwhelming reason for our customers choosing a LISA and it is proving a popular choice among groups such as the self-employed who do not benefit from employer contributions to a pension. Others are using it as a valuable top up when they have fully benefited from their employer match while others are using them because they are likely to hit the lifetime allowance in their pension.
“We could see further demand for Lisas in future with the government top-up stacking up well should the basic rate of pension tax relief drop to 19 per cent in 2024.
“There is clearly huge demand for Lisas but not everyone is able to benefit from them – the over 40s for instance cannot open a Lisa. Over half of those who weren’t using a LISA said it was because they were too old to have one. How many of these people would take advantage of a LISA if they were able?
“It is also clear more information needs to be made available about them as one in five people not using a LISA didn’t know what one was while 6 per cent thought they were only for first-time buyers. If we can boost awareness of Lisas we should continue to see them go from strength to strength.”
