Lisa gets a lukewarm welcome from UK savers

This month's launch of the new Lifetime Individual Savings Account (LISA) has been described by financial experts as 'a bit of a damp squib'.

It was snubbed by banks and building societies on its launch day on April 6. None were offering LISAs immediately.

Only three providers are expected to offer a LISA this month, and they are all investment platforms which will operate a stocks & shares version only.

LISA was the brainchild of former Chancellor George Osborne, and offers younger savers a 25% yearly bonus, which could put them in line for a bonus of £32,000 if they put aside the maximum amount of £4,000 annually for the maximum possible period of 32 years.

Savings vehicle

The account is designed to help under-40s purchase their first home or save for retirement by investing in either cash or stocks & shares.

Hannah Maundrell, editor-in-chief of Money.co.uk, said: "It's a bit of a damp squib as there are no cash LISAs yet confirmed for launch.

"Yet again the Government has promised consumers the chance of a shiny new savings vehicle without consulting with the industry on how and when they can deliver it."

MoneySavingExpert.com came with a similar 'damp squib' comment. But it added: "Don't ignore it, as £1,000 of annual free cash is nowt to be sneezed at, and for first-time buyers delay could cost. For retirement savings it works the same way, but whether it beats a pension is a much trickier conversation."

Complex

Banks and building societies have complained that LISA is too complex for customers to understand. There have also been worries that workers might stop saving into a pension because of it.

Some providers have even warned that savers could also lose money in the short term, if they want to take out their cash.

LISAs are available for those aged between 18 to 39 from the 6th of this month. If you turned 40 on or before this date, you aren’t be eligible.

Money transferred into a LISA from another ISA is also eligible for the Government bonus.

Once the Government bonus is paid into your Lifetime ISA account, you can invest it just like your other savings and will be able to earn interest or get investment growth on it.

 An investor's LISA manager will claim the bonus for them and it will be added automatically to their LISA account. Their LISA manager is the bank, building society or asset manager where they  opened their  LISA.

Investors will receive their first bonus payment in April 2018. From April 2018, any bonus will be added to the account every month. Bonuses stop when you turn 50.

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