The study

The research explores millennials’ views on the Lifetime ISA, following concerns voiced by individuals aged under 40. The cohort is unclear whether the Lifetime ISA represents a better form of saving than a more traditional pension scheme. The research was commissioned by FT Money and undertaken by BritainThinks, a research and strategy group. A focus group was held with 12 people and a further 1,000 were consulted through an online poll, all aged between 18 and 39.

Key findings

The study identified findings in relation to six key themes:

• • Four in ten would use the Lifetime ISA to save towards their first property. However, individuals raised concerns that they would not be able to save enough. Londoners particularly commented that the £450,000 limit is insufficient, particularly if they were planning to buy a property with friends or family members.
  • Owning a property was unanimously more important to those consulted than starting a pension.
• • Over a third of those polled felt paying into a Lifetime ISA was preferable to a pension.
  • The poll revealed a widespread lack of pension know-how, even though one-third of those polled had a pension through their employer.
  • Nearly half of those polled (47 per cent) agreed that higher rate taxpayers would be better off saving into a Lifetime ISA than a pension, suggesting widespread misunderstanding about the relative benefits.
• • More than half of those polled thought it would be better to invest for the longer term in accounts such as a cash ISA, rather than the stock market.
  • A third of workshop participants would open a Lifetime ISA, and use it like a cash ISA. Over half - 54 per cent - of those polled agreed.
  • Nearly 40 per cent of those polled would seek advice from their bank on the Lifetime ISA; closely followed by online forums at 39 per cent.
• • The study revealed individuals under 40 lack knowledge about personal finance — particularly investment and pension savings. Focus group participants viewed investing as complicated, difficult and risky. Even those who held pensions regarded these as savings products, rather than investments.
  • Participants were uncomfortable with the idea of using the Lifetime ISA as a stocks and shares ISA (in the case of investments for ten years plus).
  • 30 per cent of those polled would ask their parents for advice on the Lifetime ISA as an investment. Some would also seek advice from friends.
• • A surprisingly high number were positive about the Lifetime ISA as they thought it would incentivise saving. The 25 per cent bonus was viewed positively, although some were concerned about early-withdrawals penalties.
  • Some felt the Lifetime ISA was potentially more flexible than a pension.
• • Many struggled with the thought of being able to save even £400 a year and so questioned the worth of the Lifetime ISA.
  • Financial goals focused on clearing credit card debt, and living within their means. Three-quarters (74 per cent) of those polled agreed that the financial outlook for their generation was significantly worse than for previous generations.

Points to consider

• • The author does not explicitly specify the geographical coverage of the sample.
• • BritainThinks conducted a workshop with 12 individuals and interviewed 1,008 individuals online, aged 18-39, during March 2017. The data were weighted to be representative of all 18-39-year-olds, and therefore the findings can be generalised from.
• • The findings have a broad applicability as they are representative of all 18-39-year-olds, and could therefore be useful to a wide range of financial advisers providing savings advice.

Full report

What do millennials really think of the Lifetime ISA? - full report