Scottish Friendly sets out new Lifetime ISA option

In a move which the mutual says is a “unique take on the Lifetime ISA”, the new scheme initially places the investor’s money in a Scottish Friendly My Choice (ISA) whilst providing the investor with a simple way of moving their money into a Lifetime ISA at a time of their choosing.

The ‘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 sure 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 £4000 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 £4000 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. It’s the sort of innovative solution that our customers and partners have come to expect from Scottish Friendly.”

Lovatt concludes: “It’s such a shame that the most of the industry is neglecting what could be the answer to the fatally damaged brand of pensions in the eyes of those under 40. However given the speed of the rest of the industry to adapt to change, I suspect much of the criticism is a cover for lethargy in product development rather than genuine opposition.”

Scottish Friendly’s My Choice (ISA) offers extremely affordable investments from just £10 a month or with a lump sum of just £100. Investments will be in a Scottish Friendly My Choice policy within which the investor can choose from a range of funds.

Tax treatment depends on individual circumstances. Tax law may change in the future. The value of a stocks and shares, or investment, ISA investment can go down as well as up and investors could get back less than the amount paid in. An investment ISA should be regarded as a long-term investment, for at least five years.