Lifetime ISA (LISA)

The tax-free way to save for your first home and/or retirement with up to £1,000 government bonus each year

Lifetime ISA (LISA)

Foresters Lifetime ISA (LISA) FAQs 

Want to know more about investing for the medium to long-term in our Lifetime ISA (LISA)?

Take a look at the most frequently asked questions in our FAQs below. Simply click 'Show info' to display the answer. If you have any questions that are not answered here, please contact us.

About the Lifetime ISA (LISA)

What is a Lifetime Individual Savings Account (Lifetime ISA/LISA)?

A LISA is a savings account that enables you to save towards purchasing a first time buyer property with a value of less than £450,000.

and/or

To provide a method of saving for retirement.

You may contribute up to £4,000 to your LISA each tax year, and the government will contribute 25% of the money paid into the LISA by you.

Providing you are aged 18 to 39 and a UK resident for tax purposes, you are eligible to take up a LISA.

What are the rules that apply?

(All tax years start on the 6th April and end on the 5th April the following year.)

The proceeds of the LISA are not subject to income tax or capital gains tax but may be liable to inheritance tax, depending on the size of your estate. The money invested in this LISA is currently invested in a tax-exempt fund, although dividends earned on equities within the fund will have been taxed at source and that tax cannot be reclaimed.

Warning: The rules concerning the taxation of a LISA may change in the future.

How does the process of paying towards a first time buyer property work?

When you are buying the first time buyer property, we will encash the policy and send the proceeds of the policy to the solicitor or licensed conveyancer who is acting on your behalf. We cannot pass the proceeds to yourself. If the purchase of the first time buyer property does not complete, the solicitor will return the monies to us and we will reinvest these in your policy at no loss to yourself.

Can I transfer my LISA to another manager?

Individuals will be able to transfer their Lifetime ISA between ISA managers. An account must be transferred within 30 days of an account holder’s request.

There will be no limit on the amount that can be transferred. Where individuals transfer funds that have not yet received a government bonus, it will be the responsibility of the ISA manager to whom the funds have been transferred to claim any government bonus due on the transferred funds from HMRC. The bonus will still be calculated on the total contributions to the Lifetime ISA account during the relevant period.

Where funds or investments are transferred to a Lifetime ISA from an ISA of a different type, the value transferred to the Lifetime ISA will count against the Lifetime ISA contribution limit but not the overall ISA limit for the year. Partial transfers of funds from previous years’ ISA contributions will be permitted. However, where funds are transferred that contain contributions made in the same tax year, those contributions must be transferred in full up to the LISA limit of £4,000. 

Can I transfer a Help to Buy ISA into a Lifetime ISA?

During the 2017/18 tax year only, those who already have a Help to Buy: ISA will be able to transfer any funds (including interest) built up before 6 April 2017 into a Lifetime ISA without these counting towards the Lifetime ISA contribution limit. They will receive a 25% government bonus on the full value of the transferred funds.

Contributions to a Help to Buy: ISA made on or after 6 April 2017 can still be transferred to a Lifetime ISA, like any transfer from an ISA of a different type, but will count against the Lifetime ISA contribution limit for the tax year in which they are transferred.

What happens if I cash-in my LISA for purposes other than buying a first time buyer house, or attaining age 60?

You can cash in or partially cash in your LISA whenever you want, but you may get back less than you have paid in. The government will deduct a 25% withdrawal charge.

The following table gives an example of this.

Impact of early withdrawal charge

 LISA impact of early withdrawal charge

The Government withdrawal charge of £250 is returned to HM Revenue and Customs.

Note: The above example LISA account bears no interest and does not take into account charges.

Warning: The Lifetime ISA withdrawal charge recovers any LISA government bonus, any investment growth on that bonus plus an additional amount, and if the LISA government withdrawal charge is incurred you could receive back less than you have paid in.

The cash-in value of your LISA will depend upon the amounts you have invested, and any annual bonuses that have been added. Depending on the investment returns that have been achieved and our costs, in favourable investment conditions we may also add a final bonus to the plan value. Conversely, in adverse investment conditions we may apply a Market Value Reduction to reduce the plan value. 

What is a Market Value Reduction (MVR)?

This is a deduction we may apply when you make withdrawals or fully cash in your LISA. Its purpose is to be fair to both plan holders leaving the fund and those staying, by ensuring that the cash-in value is not unfairly higher than the market value of the plan’s assets and that a fair share is left for the remaining plan holders. This adjustment will reduce the value of your LISA at that time and in some circumstances could mean that you get back less than you have paid in. We will never apply an MVR on death or terminal illness as defined in accordance with HMRC definition.

We have not applied an MVR to date on the Foresters Friendly Society Stocks & Shares ISA, however this could be applied in the future.

How are bonuses decided?

Depending on how the underlying assets in the fund perform, and the costs incurred, at the end of each year we aim to declare an annual bonus. In addition, when you decide to cash in your Foresters Friendly Society LISA we may add a final bonus depending on the overall investment growth that has been achieved and expenses incurred.

Bonuses are added as a result of the growth performance of the underlying fund. This is different from a bank or building society account or cash LISA where your savings can grow as a result of the interest added to your account. Although in some investment conditions the growth in a Foresters Friendly Society LISA might not be as much as that on an interest-paying account, investing in this way means there is the potential for growth over and above the level which might be achieved on interest-paying accounts.

The addition of bonuses is not guaranteed and therefore it is possible that your LISA might not receive any annual and/or final bonus.

How are government bonuses paid?

The way in which government bonuses are paid, will change after the 2017/18 tax year.

Any LISAs taken out in the current 2017/18 tax year will receive the government bonus during the 2018/19 tax year. LISAs taken out and withdrawn in the tax year 2017/18 will not receive the Government bonus.

In tax years subsequent to 2017/18, Lifetime ISAs will receive the Government bonus on a monthly basis.

Are there any charges?

There is an Annual Management Charge which is initially set at 1.25% of the value of your Foresters Lifetime ISA, which will be taken into account when calculating policy bonuses.  This may change but it will never exceed 3% of the value of your Stocks & Shares LISA in any one year.  The charges are designed to cover our costs for administering the LISA on your behalf.  For more information about charges, please see the Lifetime ISA (LISA) Key Features.

How can I close my LISA?

1. Within the 30 day cancellation period

If you wish to close your LISA within the 30 day cancellation period, please complete and return the cancellation form, sending it to Foresters Friendly Society, 29-33 Shirley Road, Southampton, SO15 3EW.

      • If this was a non-advised sale a full refund will be paid
      • If this was an advised sale where an adviser fee was paid from your investment, all the money invested into the LISA will be returned, which excludes any fee which will have already been paid to your Financial Adviser.

2. After the 30 day cancellation period has passed

You can cash-in your Lifetime ISA whenever you want after the 30 day cancellation period has passed, however due to the nature of the investment you may get back less than you have paid in. 

The government will deduct a 25% withdrawal charge, if you cash-in the LISA after the first tax year invested.

For more information please see the Lifetime ISA Key Features.

Can I transfer from a LISA to another type of ISA?

Individuals can transfer funds from their Lifetime ISA to another type of ISA, but this will count as a chargeable withdrawal at 25% from the Lifetime ISA, resulting in loss of government bonuses and policy bonuses that have been added. The same will apply where funds are transferred to any account that is not an ISA, or to any financial institution that is not an ISA manager.

Transfers from a LISA to another ISA after the LISA holder reaches 60 years of age will not attract the withdrawal penalty.

I'm not sure if a LISA is right for me. What should I do?

If you're unsure as to the suitability of this product you should seek advice from a Financial Adviser. You may have to pay for this advice.

Payments into the Plan

What is the minimum payment?

You can choose to contribute regular amounts from just £100 per month by Direct Debit, or from £50 per month if you are an existing Foresters member, or child/grandchild of an existing Foresters member; invest lump sums or; if you prefer, you can use a combination of both up to a maximum of £4,000 this tax year. If you wish to invest lump sums, a minimum £500 lump sum contribution is required to open a LISA, then top ups of at least £250 can be made.

What is the maximum payment?

To benefit from tax exemption under current legislation, the maximum level of total contributions for a Lifetime ISA is £4,000 this tax year.

Can I choose how much I pay?

You can set up regular contributions, invest lump sums or combine both options.  Regular payments will be collected by Direct Debit from your bank.

How do I top up my LISA?

You can top up your LISA with lump sum or regular monthly contributions. The combination of these cannot exceed the maximum LISA allowance in any one tax year. If you are uncertain about the maximum increase in contributions you can make for the rest of the tax year, please call us on 0800 988 2418.

Regular Contribution Top Ups

If you wish to set up regular contribution payments into your LISA, this can be done by setting up a Direct Debit:

  1. Direct Debit

Download the LISA Top Up Form, complete the Direct Debit instruction specifying the monthly contributions you would like to make. Then send it back to us and we will do the rest for you.

Lump Sum Top Ups

Lump sum contributions can be made:

  1. By debit card payment 

    • Top up online
      To make a one-off payment from your debit card complete the online top up form.

    • Top up by phone
      Call us on 0800 988 2418 and we can take a payment from your debit card over the phone.

  2. By cheque

    Download and complete the LISA Top Up Form, attach a cheque for the lump sum contribution amount, then send it back to us and we will do the rest for you. 

What happens if I die?

The death benefit provided by your LISA will be paid to your estate. The guaranteed amount payable on death is 100.1% of the Contributions you have paid plus any attaching Annual Bonuses less any withdrawals you have already made. This is the minimum amount payable on death and if the Accumulated Fund plus any Final Bonus applicable at the date of death is higher than the minimum amount then the higher amount will be payable.

There is no government charge on death.

The proceeds will not be liable to capital gains tax or income tax, but may be liable to inheritance tax, depending on the size of your estate.

If you have nominated a beneficiary, they can claim up to £5,000 of the Plan Benefit without waiting for probate. Any excess would become part of your remaining estate and have to wait for probate.

Returns on the plan

Where is the money invested?

Any money contributed into a Foresters Friendly Society Lifetime ISA is invested in the Order Insurance Fund, which is a with profits fund. The money paid into the fund is spread across a number of different types of investments and you benefit from the exposure to a range of asset classes which may include equities (company shares), fixed interest bonds (government and company), property and cash. A further advantage of this approach is that if the return of any one particular asset type is poor, your investment may be protected from the full impact of this fall as the other assets forming part of the overall investment may perform better.  Thus the fall in value of one asset class (eg shares) may be cushioned by the potentially better performance in another asset class (eg property).

What interest does the plan pay?

The Foresters Stocks & Shares LISA does not pay interest. Instead, the Order Insurance Fund provides your plan with the potential for growth by way of bonuses in addition to the 25% government bonus. What growth your LISA receives will depend on the performance of our Order Insurance Fund. The investment performance cannot be guaranteed.

How safe is my money?

You'll be pleased to hear that our funds have grown steadily over the years and our financial position remains strong. (Source: Reports & Accounts 2016). However, note that past performance is not a guide to the future.

However, if in the unlikely event that Foresters Friendly Society were to be declared insolvent, you would be able to make a claim under the Financial Services Compensation Scheme.

About Foresters Friendly Society

Who is Foresters Friendly Society?

Foresters Friendly are a mutual society, founded in 1834 by ordinary people with a common purpose - to support each other through financial and other difficulties.

We've been looking after our members, and their finances, for over 180 years, offering care and protection through relevant affordable financial products.

Since 1834 our aim has been to be open, approachable, honest and fair, treating all our members as individuals.

We always put the interests of our members first.

What is a Friendly Society?

Friendly Societies have been around for hundreds of years. They were founded on the idea of mutuality - that if a group of people contributed to a mutual fund, an individual within the group could benefit in a time of need. The principles still apply - friendly societies are owned by, and operate in the interests of, their members. Unlike public limited companies, they use revenues to the benefit of their members rather than distributing profits to their shareholders.

How do Mutuals perform, compared to PLCs?

With no shareholders to answer to, mutual societies can ensure their profits are only used for their members’ benefits by sharing this amongst members, or re-investing to provide potentially better returns, better value or higher levels of service.

Over the last 10 years, the average mutual with-profits policy produced 29% more than an equivalent from a PLC insurer – that’s around £11,400 more after 25 years for a £50 per month policy.

(Source: Association of Financial Mutuals:  AFM Key facts about mutual insurers and friendly societies June 2015)

What is a Mutual?

UK financial organisations are either authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) and can be regulated by one or both regulators, and are either mutuals or public limited companies (PLCs). Unlike a PLC, a mutual organisation has no external shareholders to pay in the form of dividends and does not seek to make large profits or capital growth.

Mutual organisations are owned and run for the benefit of their members and their profits are usually re-invested for the benefit of members, although some may be used for internal finance to ensure the mutual is sustainable, safe and secure.

Today, UK mutuals account for over £116 billion in revenue every year and 1 in 3 people in the UK are a member of at least one mutual. (Source: The Mid-Term Mutuals Manifesto 2013 and the Mutual 2013 Yearbook)

Membership and Extras

I read somewhere about benefits - but I imagine I pay for those somewhere?

When you take out one of our policies or plans, you automatically become a member of Foresters. As a mutual, we don't have to answer to external shareholders. Instead, we use all our profits to benefit our members. All Foresters customers can take advantage of Foresters Extras, a range of benefits we offer at no additional cost.

Do I get any additional benefits as a Foresters customer?

All our customers benefit from Foresters Extras, a range of benefits we offer at no additional cost.

Help and support

Where can I get help?

For help and support, please contact Foresters Friendly Society.

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