Lifetime ISA

Fancy getting on the property ladder? Or looking to save for your retirement? A Lifetime ISA could help. It’s a savings account that helps you to achieve your future plans, tax free. Whether that’s purchasing your first home with a value of less than £450,000. Or providing a cushion for when you’ve stopped work.

You can pay in up to £4,000 each tax year into a Cash LISA, or a Stocks & Shares LISA like the one offered by us (or split the allowance between both), and the government will add a 25% bonus on the money paid into the LISA by you each month. A very welcome bonus!

We aim to add an annual bonus each year too, plus a possible final bonus when you withdraw your money. The addition of Foresters bonuses is not guaranteed.

You can open a LISA if you’re aged 18 to 39 and a UK resident for tax purposes. Tax rules may change and depend on individual circumstances.

Once you’ve opened your LISA, you can pay into the plan until you turn 50 – with government bonuses being added. From age 50, no further contributions can be made. So, if you were to open your account at the age of 18, you’d be able to pay into it for a maximum of 32 years.

LISAs are best viewed as medium to long-term investments. If you are planning to use your LISA for a deposit on your first home and are looking to buy a home in the next three years, our LISA may not be right for you.

Because the Lifetime ISA is designed to be held for a number of years, the rules and regulations covering their operation and tax status may change in the future. You won’t pay tax on your investment, but it’s worth remembering that tax is automatically deducted from share dividends and that tax cannot be reclaimed. These tax rules also depend on your individual circumstances.

To open a Foresters LISA, you can choose to contribute regular amounts from £50 per month by Direct Debit, or invest a lump sum of at least £500. You are then able to invest lump sums of a minimum of £250 as top ups. Or if you prefer, you can use a combination of both, as long as your total contribution is not more than £4,000 per tax year. As LISAs are designed to be held for a number of years, the limit on annual contributions may change in the future.

Even your parents or grandparents can help

We know how hard it can be to save for big things like a first home or retirement, so if your parents or grandparents want to help you, this will enable you to reach your savings goal quicker. While they are not allowed to invest directly, they can pass the money to you to put into your LISA.

Yes, if you have other savings or ISAs that are not performing as well as you would like, you could consider moving that money into your LISA. If you’ve already started saving for your first home in a Help To Buy ISA, you can transfer that into a LISA, and receive the 25% government bonus on those funds too. Any transfer from another ISA must not exceed £4,000 and will count towards your annual £4,000 LISA limit. Before you do this, it’s important that you ask your existing provider/s if there will be any penalties or loss of interest from your existing savings or ISAs so that you can make an informed decision.

Transferring an existing ISA is simple. All you need to do is select the Transfer option in our online application, and ensure you complete and return the Transfer form provided so we can process your transfer request. We will then contact your existing provider to start the transfer process. If you already hold a Lifetime ISA with us and would like to transfer other savings to it, you can do this via our online Top up form, ensuring you complete and return the Transfer form provided. You’ll be asked to provide your Foresters Lifetime ISA policy number.

You can’t take out a joint LISA, but your partner can also take one out. This means you can both benefit from the tax advantages, government bonus and growth potential from Foresters. Both you and your partner can each contribute a maximum of £4,000 to a LISA. In addition to this, for the current tax year, you can also each contribute £16,000 in a normal Cash ISA or into a Stocks & Shares ISA like the one we offer.

No. You need to make sure that your LISA is set up and has money deposited in the plan before your 40^th birthday. This is part of HMRC’s requirements for the product, as it’s only available to those aged 18 to 39.

If you’re not far off your 40^th birthday, it’s a good idea to start the plan with a lump sum payment, as depending on when in the month you make your application, it could be several weeks before your first Direct Debit payment is collected. So, to be on the safe side, we’d suggest you consider opening the plan with a lump sum if you’re less than two months from turning 40.

When you’re buying your first home, we don’t pass the proceeds on to you. Instead, they go directly to the solicitor or licensed conveyancer who is acting on your behalf. If, for some reason, the purchase of the property doesn’t complete, the solicitor will return the money to us. We’ll then reinvest it back in to your plan at no loss to yourself.

The money you pay into your Stocks & Shares LISA, together with the government bonus, is invested in our consistently well performing With Profits Order Insurance Fund, which aims to provide growth over the medium to long term. Annual bonuses and a possible final bonus may be added to your LISA by Foresters. The value of these bonuses depends on how much profit our fund makes and this cannot be predicted.

We have declared the following annual bonus rates for our Lifetime ISA, which are paid in addition to your 25% government bonus:

The annual bonus is applied to the amount invested (minus any withdrawals you may have made to your Lifetime ISA) plus any previous bonuses that have been added.

The addition of any bonus is not guaranteed and you may not get back the full amount originally invested, dependent on the investment conditions at withdrawal. Inflation will affect what you can buy when you cash-in your LISA.

To find out more about the addition of bonuses and how we manage our fund please read our Principles and Practices of Financial Management (PPFM).

We may vary the design of a product to best meet the needs of our policyholders which may affect the timing and size of future bonuses. Therefore the above table is provided for information purposes only and should not be considered an indication of likely future performance.

As a friendly society, it’s particularly important to us that our investments are managed in an ethical and responsible way. Foresters is a signatory of the Principles for Investment (PRI) which demonstrates our commitment to responsible investment, to reducing our impact on the environment and mitigating climate change risk in our investment portfolios.

When you open a plan, you can be confident that investing with us means your money will be invested in a trustworthy and environmentally conscious way. The PRI is the world’s leading supporter of responsible investment and promotes a better understanding of the investment implications of environmental, social and governance (ESG) factors.

Find out more about the six PRI principles we have signed up to here.

The 25% government bonus your Lifetime ISA receives is based on the contributions that you make in any one tax year and is paid on a monthly basis. So, if you pay in £200 a month, your plan will receive a government bonus of £50 that month too. We will liaise with the HMRC to ensure that your Lifetime ISA receives the government bonus – you don’t need to do a thing.

There’s an annual management charge of 2% of the value of your Foresters Lifetime ISA, which will be taken into account when calculating policy bonuses. This may change but we promise it will never exceed 3% of the value of your Stocks & Shares LISA in any one year. These charges cover our costs for managing the LISA for you. For more information about charges, please see the Lifetime ISA (LISA) Key Information Document and Important Information.

The LISA is designed for people saving for their first home or later life and retirement from age 60. So you should only plan to use the funds for those purposes. You are still able to cash it in for other reasons, but in most cases this would incur a 25% government charge, applied to the whole amount of your withdrawal.

This charge returns the government bonus to them, including the growth or other bonuses received on that money. If you do wish to make withdrawals, then it’s important to read the Lifetime ISA Important Information for further details.

If you’re unsure as to the suitability of this product you should seek advice from a Financial Adviser. Of course, you may have to pay for this advice.