ISAs  

Scottish Friendly reveals Lisa plans

Scottish Friendly reveals Lisa plans

Scottish Friendly has confirmed it will offer a Lifetime Isa as part of an "integrated Isa-Lisa proposition", targeted at the lower end of the market, FTAdviser can reveal.

The firm's commercial director Neil Lovatt told FTAdviser customers would be able to sign up to the Scottish Friendly Lisa from April, although the product would not be ready to receive money until later in the year.

He said that, when the Lisa was ready, customers would be able to move their money "seamlessly" from an Isa into the Lisa, and receive the 25 per cent government bonus.

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But Mr Lovatt insisted this delay was not solely down to the Lisa not being ready.

He said Scottish Friendly was pursuing what he called an "Isa first" approach to the Lisa. This will see customers putting money into a traditional Isa before committing to locking it into a Lisa.

"There's no advantage in rushing in," he said, pointing out that as long as the total contributions, including investment earnings, did not exceed £4,000, there would be no disadvantage in holding off.

Scottish Friendly's customers contribute on average around £50 a month into their Isa accounts, putting them far below the £4,000 a year contribution limit on the Lisa.

For such customers, he said there was no need to lock their money into a Lisa straight away, because they would receive exactly the same amount in government bonus regardless of when they made the contribution.

"If you're 25 or 30, unless you're going to be putting in £4,000, why flip it over straightaway? The Isa-first approach makes more sense," he said.

Mr Lovatt's comments came as the Financial Conduct Authority revealed its final regulatory guidelines for the Lifetime Isa.

Many providers have been holding off announcing a product until these guidelines were confirmed. Until now, only Hargreaves Lansdown and The Share Centre had committed to having a product ready to go to market on 6 April.

While Scottish Friendly does not quite fit into that category, today's announcement was a more concrete commitment than most providers have been willing to give.

Speaking more generally, Mr Lovatt said he believed the Lisa was the beginning of a dramatic new approach to retirement savings, which he described as "Isa-Lisa-pension".

He subscribed to the view that the "pensions Isa" model favoured by former-chancellor George Osborne, and much-criticised by a large chunk of the pension industry, was the likely outcome.

"As soon as you allow employer contributions, the system changes overnight," he said, adding: "The reason the pension world is worried is because they are going to have to go away and build new systems." 

In its Lisa guidelines, the FCA requires providers to warn customers they may miss out on employer contributions if they opt for a Lisa over a pension - a rule many pension providers and auto-enrolment advocates campaigned for.

However, it was not enough to dampen the fears of some in the industry.