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)

So how does it all work?

Click a title to read detailed information.

What is the Lifetime ISA?

A Lifetime ISA is a savings account that enables you to save towards purchasing your first house and/or to save towards retirement.

Savers aged between 18 and 39 can open a Lifetime ISA and deposit up to £4,000 per year until their 50th birthday.

The government will add an annual bonus of 25% to any savings. So, for every £4,000 you save, the government will contribute £1,000.

Saving for the medium to long-term

LISAs are best viewed as a medium to long-term investment. 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 3 years, then our LISA may not be right for you.

Because the LISA 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.

If you are unsure about whether the LISA is right for you, we recommend speaking to a financial adviser.

 

Choose how you want to save

To open a LISA, you can choose to contribute regular amounts from £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), 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. But remember you can only save up to £4,000 in each tax year in your LISA.

 

Boost your savings with a bonus of up to £1,000 each year

The Government will add a 25% bonus to your savings in our Stocks & Shares LISA. So if you save the full £4,000, the government will add £1,000 at the end of the first year, which means you will have £5,000. On top of this, you could also get growth in the form of annual and final bonuses that are added to your fund by Foresters.

The 25% government bonus is based on the contributions that you make in any one tax year and is paid annually for 2017/18, then monthly from the 2018/19 tax year. 

Additional Foresters Bonuses

The money you put into your Stocks & Shares LISA, together with the government bonus, is invested in our With Profits Order Insurance Fund, which aims to provide growth over 5 years or more. An annual and a final bonus may be added to your LISA by Foresters. The value of these bonuses depend on how much profit the fund makes.  The addition of these bonuses is not guaranteed.

The value and addition of annual and final bonuses depend on the future performance of the Order Insurance Fund and how we decide to distribute any profit. You should also be aware that depending on investment conditions you may not get back the value of your original investment. Inflation will affect what you can buy when you cash-in your LISA. 

 

Transfer money from other ISAs or Savings

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 during the 2017/18 tax year, and receive the 25% government bonus on those funds too. Before you do this, it’s important that you ask your existing providers if there will be any penalties or loss of interest from your existing savings or ISAs. Remember you can only contribute up to £4,000 in each tax year to your LISA.

 

Your partner may also hold a Lifetime ISA

Although you can’t take out a joint LISA, your partner can also take one out, so you can both benefit from the tax advantages, government bonus and growth potential. Both you and your partner can each contribute a maximum of £4,000 to a LISA. In addition to this, for the tax-year 2017/18 you can also each contribute £16,000 in a normal Cash or Stocks & Shares ISA.

 

Access to your money

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, plus a small penalty for the withdrawal. If you do wish to make withdrawals, then it’s important to read “How do I make withdrawals?” in the Lifetime ISA Key Features for further details.

Whilst you have to be under 40 to open a LISA, once open you can contribute until age 50, with government bonuses being added. From age 50, no further contributions can be made, and in most instances the 25% penalty would apply if you were to access your funds. This does not apply if you fall terminally ill or die. From age 60, you can access your LISA for any purpose without penalty.

The cash-in value of your LISA will depend upon the amounts you have invested, the performance of the fund and any expenses incurred.

In adverse market conditions a Market Value Reduction (MVR) could be applied when you transfer out, withdraw from, or fully cash-in your LISA meaning the amount you receive will be reduced and you may not get back the full amount originally invested. We would only do this to ensure fairness between account holders leaving the fund at different times. We will never apply an MVR on death or terminal illness as defined in accordance with HMRC definition.

 

Unique extras with a Foresters LISA

By taking out a Foresters Stocks & Shares Lifetime ISA, you automatically become a Foresters member. And with membership you’ll get access to a range of brilliant extras that can give you support and assistance when you need it.

  • Financial grants for education and health care

We offer a number of discretionary financial grants for members to support with things like higher education, dental and optical care or convalescence.

  • Social and community events

Each of our social branches organises regular meetings and community events, from coffee mornings to theatre trips.

  • Foresters Care

Practical help and emotional support from a personal nurse adviser is available for any member with a serious health condition.

The membership benefits we provide aren't regulated and are regularly reviewed by us to ensure they are relevant to our members.

 

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