From April 2028 you will no longer be able to open a Lisa, as it’s being replaced with a new savings product for first-time buyers only.
Here, Which? explains what’s happening to the Lisa and explores whether it’s worth opening one for retirement saving.
so you can see more independent news written by our expert journalistsundefinedHow long you have to open a Lisa
The Lisa was launched in 2017 to help people save for retirement or to buy their first home. The generous government bonus has proved a hit with savers – the number of open accounts nearly doubled from 706,000 in 2020-21 to 1,338,000 in 2023-24, according to HMRC figures published last year.
HMRC has confirmed that it will be possible to open a Lisa until the new Isa becomes available and you'll be able to continue saving under the current rules indefinitely.
Find out more:undefinedHow a Lisa works for retirement
You can deposit up to £4,000 a year in a Lisa and receive a 25% bonus from the government – worth up to £1,000. You need to be aged between 18 and 39 to open one, but can continue saving into it until you turn 50.
If you use a Lisa to save for retirement, you won’t be able to withdraw the money until you turn 60. And if you withdraw the money for anything other than retirement or purchasing your first home, you have to pay a 25% withdrawal penalty – which can leave you with less money than you originally put in.
It’s unclear exactly how many people use their Lisa to save for retirement: HMRC figures published last year stated that 45% of holders used their account for retirement savings, but these figures were recently withdrawn due to methodological issues.
Find out more:Lisa vs pension: which is better?
Department for Work and Pension's Family Resources SurveyFor example, if you earn £34,000 and are automatically enrolled in a workplace direct contribution scheme.
If you pay the minimum 5% into your workplace pension, you'll contribute £1,110.40 a year and receive £277.60 in tax relief from the government, plus £832.80 from your employer (assuming they contribute the minimum 3%), taking your total annual pension savings to £2,220.80.
The gains could be even bigger if you pay income tax at a higher rate, or your employer contributes more than the minimum.
£1,110.40Find out more:When to consider a Lisa
Auto-enrolment has significantly increased the amount of people who pay into a pension: for employees, pension-scheme participation has increased from 60% in 2014-15 to 80% in 2024-25, according to the DWP’s most recent figures.
But if you don’t have access to a workplace scheme, for example if you’re self-employed or not working, a Lisa can be a useful alternative.
If you’re a basic-rate taxpayer, the 25% bonus is equivalent to the money you’d receive in the form of pension tax relief. And when it comes to accessing your money, you won’t be taxed on withdrawals (you can take 25% of your pension tax free and the rest will be taxed like income).
If you're a higher or additional rate taxpayer (or intermediate, higher, advanced or top rate in Scotland), pension tax relief will be worth more than the government Lisa bonus.
Unlike a pension, you can access your savings early if needed. However, a 25% withdrawal penalty applies if you take money out before age 60 for anything other than a first home, meaning you could get back less than you paid in.Ultimately it's not a binary choice and you can save in a Lisa alongside your pension (this is a good option if you've reached your annual allowance for pension contributions).
Find out more:undefinedundefinedHow to start saving for retirement
Getting started with retirement saving can feel daunting, but taking a few simple steps early on can make a big difference to how much you build up over time. Here’s what to consider.1. Understand your options
If you’re employed, 22 or over and earn at least £10,000, you’ll be automatically enrolled into your workplace pension. While you have the option to opt-out, it’s best not to if you can afford to, as employer contributions and tax relief will significantly boost your savings.
If you’re self-employed, consider opening a personal pension or self-invested personal pension (Sipp), or Lisa.
Find out more2. Consider how much you can save
If you get a pay rise or bonus, consider paying more into your pension. Increasing your contributions by a small amount can make a big difference over time, thanks to compound interest.
Find out more:3. Keep track of your pensions
Lots of people end up with multiple pension pots as they move between jobs. Keep track of the details of your pension scheme for all your employers, and make sure your details are up to date with your pension providers.
If you’ve lost track of a pension pot, contact your employer or use a pension-tracing service.
Find out more:source https://www.which.co.uk/news/article/2-years-left-to-open-a-lifetime-isa-should-you-use-one-for-retirement-amDnG3b5oubP