A quarter (25%) of people would open a Lifetime ISA if they were able to do so after the age of 40, according to Hargreaves Lansdown.
This figure rises to 29% among the 35-54 age group.
Lifetime ISAs, launched in 2017, allow people under 40 to put in up to £4,000 each year until they’re 50, to save for a first home or retirement. This is topped up by a 25% annual government bonus, up to a maximum of £1,000 per year.
However, the product has attracted widespread criticism both for its 25% early withdrawal charge and age limit.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Lifetime ISAs have the potential to make a huge difference to people’s retirement prospects, but many are blocked because at the age of 40 and above you can’t open one.”
Morrissey said the self-employed could benefit greatly from LISA reform as they may be less likely to save into a pension.
“Self-employed people tend to struggle with their long-term resilience with the most recent findings of the HL Savings and Resilience Barometer showing that just 36% of self-employed households are on track for an adequate pension. Many will look beyond pensions to build their resilience in retirement,” she explains.
“Using a LISA gives them the ability to access the money if they need to, albeit subject to an exit penalty. However, given that many people don’t go self-employed until later in their career, there’s a good chance that many will miss out on being able to open one.
“More than one in five self-employed people said they would make use of a LISA if they could open one after the age of 40, so it could have a big impact on this group’s long-term resilience.”
Hargreaves Lansdown is calling upon the Government to allow older savers to open a LISA, as well as reduce the exit penalty from 25% to 20%.
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