Foresters Friendly unveils Lifetime Isa

9 June 2017

Foresters Friendly Society has launched a stocks and shares version of the Lifetime Isa (Lisa).

The society has followed in the footsteps of Hargreaves Lansdown, Nutmeg and The Share Centre in offering a stocks and shares Lisa. Skipton Building Society became the first provider to offer a cash product earlier this week.

Foresters’ product charges a 1.25% annual management fee and holders can open an account with a £100 monthly contribution, or £50 if they’re existing Foresters customers. The account can also be opened with a minimum £500 lump sum, up to the annual £4,000 Lisa limit.

You can't select your own investment options within the Foresters Lisa - any investments go into its Order Insurance Fund. The society says this contains a variety of assets including “stocks and shares, property and cash”. 

The account also operates on a with-profits basis. This is where the profits the Society makes are distributed among its account holders. Foresters pays this annual bonus, depending on its profits, on top of the 25% Lisa bonus from the government.

The bonus paid to account holders in 2016 was 1.75%, although past pay-outs are no guarantee of future performance.

Myles Edwards, Foresters membership director, says “We are delighted to be launching our with-profits Lifetime Isa.  As a mutual society we don’t have shareholders so our profits are distributed to policyholders.

“With the low interest rates on cash-based saving products set to continue, the challenge for young savers with ambitions to own their own home or build a retirement income has never been greater. Foresters Lifetime Isa provides savers with transparent charges at 1.25%.”

How do the fees compare?

Foresters Friendly Society has a 1.25% annual management charge. This compares with Hargreaves Lansdown’s 0.45% yearly charge on portfolios worth up to £250,000.

Nutmeg investors face a 0.75% annual charge for fully managed portfolios of up to £100,000. It charges a lower 0.45% fee for fixed allocation portfolios.

But additional fund charges also apply to both providers.

The Share Centre offers three funds for investors, depending on their level of risk. There are charges of between 1.92% and 2.01% on these, including its 0.75% annual management charge.

How does the Lifetime Isa work?

The Lisa is designed to help first-time buyers and people starting to save for retirement. This means you can only open one if you are between 18 and 39 years old.

You may pay up to £4,000 into a Lisa each year until age 50, either in cash or to invest. Whatever you pay in will be topped up with a 25% bonus from the government, up to a maximum of £1,000. Any earnings will be tax free.

For those buying a home, the property must be valued at less than £450,000 and you must have had your Lisa open for at least 12 months.

If you’re saving for retirement, bear in mind you can’t access the cash until you’re 60 – unless you pay a hefty penalty.

Find the full details by reading the Moneywise guide to Lifetime Isas.

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