Martin Lewis, founder of MoneySavingExpert.com, has issued a warning to people aged 18 to 39, urging them to open a Lifetime ISA (LISA) with as little as £1. He says this could preserve access to the account before potential Government reforms close it to new applicants.
In a video shared on social media, Lewis explained that the Government is consulting on replacing the LISA with a new first-time buyers ISA. If this happens, the LISA would be closed to new savers, but those who already have an account—even with just £1—could continue using it.
The LISA offers a 25% bonus on contributions up to £4,000 per year, meaning the Government adds up to £1,000 annually. The money can be used for a first home costing up to £450,000 or for retirement savings from age 60. Withdrawals for other purposes incur a charge.
Lewis noted that while a LISA is not typically as good as a workplace pension for retirement, it can be beneficial in certain circumstances, such as for self-employed basic rate taxpayers or those who can no longer contribute to a workplace pension.
He concluded: 'We don't know what you'll be in 10 years' time, but putting a pound in now means you'll have the facility to use it in 10 years' time if you need it.'
