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Retirement Lifetime ISA

If you're aged 18-39 and looking to set aside money for retirement, a Lifetime ISA could be ideal. This tax-free savings account is boosted by a 25% Government bonus, which means you could earn up to £1,000 a year in bonuses alone until you turn 50 – plus you’ll earn interest on top. 

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What’s a LISA?

LISA (pronounced lie-sa) is short for Lifetime ISA. It’s a tax-free savings account and Government scheme designed to help you save for your retirement. 

It works like this. For every £4 you save – up to an annual total of £4,000 – you’ll get a £1 bonus from the Government. That means you could earn up to £1,000 in bonuses every year until you turn 50. Or, think of it this way: if you open an account at the age of 18 and put in £4,000 each year, up to the maximum age you can earn bonuses, you could tot up as much as £32,000 in free Government bonuses towards your retirement. And that’s not including the interest on top, which you won’t have to pay tax on either. 

The LISA is open to people aged 18-39, and you can only use it to fund your retirement from the age of 60. LISA deposits count towards your annual ISA allowance, but you can put away up to £4,000 per year. To help you decide whether it’s the savings account for you, we’ve summed up all the details below.

Things to know

Tax-free savings (also known as Individual Savings Accounts or ISAs) accounts are simple, really: with accounts like these you won’t have to pay tax on the interest you earn. There’s also a cap on how much you can add each tax year, depending on your circumstances, and keep in mind that the tax rules around ISAs could change.

AER, or Annual Equivalent Rate, is designed to make savings accounts easier to compare. The AER will show you what your interest rate would be if interest was paid back into your account. For accounts that pay interest annually, the gross rate and the AER should be the same. For accounts that pay interest monthly the AER will be slightly higher than the gross rate. This is because if you leave your monthly interest in the account you’d start to earn interest on the interest.

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The highlights

  • government-bonus-icon25% Government bonus
  • residents-iconUK residents aged 18-39
  • online-iconOpen online with £10 today
  • interest-iconEarn interest tax-free
  • deposit-iconDeposit up to £4,000 per year
  • home-iconSave for your retirement
  • transfer-iconTransfers in are not permitted

Why choose a LISA?

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Earn up to £1,000 a year

You’ll get a free 25% Government bonus for every £4 you save, up to a maximum yearly bonus of £1,000. It’s a great way to supercharge your savings.

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Transfer to another provider any time

While we think you’ll love saving with your Beehive Money LISA, you’re not locked in if you change your mind. You can move your LISA to another bank or building society in the future.

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Look into the future

If you’re thinking about planning your long-term financial security, our Retirement Lifetime ISA could be the account for you.

Who's eligible?

Anyone aged 18 to 39 saving for their first home or for retirement. You can’t withdraw money from this account for pretty much any other reason – there are just a couple of exceptions, including terminal illness – and if you do, you’ll have to pay a 25% Government withdrawal charge. So if you’re saving for something else, have a look at our other savings accounts.

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Retirement savers

You can use your Lifetime ISA to save for retirement. You have up to the age of 40 to open an account, and can add up £4,000 a year and earn Government bonuses until you turn 50. After that, the account will remain open and keep earning interest until you can start withdrawing when you turn 60. It’s as simple as that, really. It’s not the only way to save for retirement, though, so you might think about getting financial advice to explore your options.

Important information about the LISA

We would always recommend seeking financial advice if you are considering contributing to a Retirement LISA rather a scheme offered by an employer

Now we’ve given you an overview of the LISA and how it works, you might have one or two questions. We’ve answered some of them below.

What is the interest rate and is it fixed?

The annual interest rate is variable and there may be times we need to change it. Right now, it’s set at 0.50% tax-free p.a/AER.

Will I have to pay tax on the interest?

No, you won’t. The LISA is a tax-free savings account, so you won’t have to pay tax on the annual interest you earn or the 25% Government bonus. However, if you have other ISAs you’re investing in, make sure you’re aware of your annual ISA limits.

How do I get the bonus payments?

We add the 25% Government bonus to your account automatically once it’s been processed by HMRC, which is usually 4-9 weeks after each deposit. Remember: bonuses are capped at £1,000 a year, and you can only access your savings after you turn 60 years of age.

Can I withdraw my money

Technically yes but if you take money out before you turn 60, you’ll have to pay a 25% Government withdrawal charge. That means you might get back less than you paid in. There are some exceptions, like if you’re diagnosed with a terminal illness, and you can find out more about those here.

How do I open a LISA with Beehive?

Once you’ve downloaded the Beehive Money app and registered, it’s easy to apply for an account. We’ll ask you for a few details, including your National Insurance number, your bank details and previous addresses, so simply open the app, tap ‘apply’ and make sure you have those to hand. If you’re aged 40 or over, though, you can’t open an account. Sorry about that.

Can I transfer from another Lifetime ISA?

Transfers in are not permitted for Retirement Lifetime ISA.

After a year, how much could I save?

Well, that depends! Your total will be the money you’ve put in your account, plus the 25% Government bonus, plus interest. At most you can put away £4,000 and earn a £1,000 bonus, plus interest, every year. Have a go with our Lifetime ISA calculator for an estimate.

Will I need to meet any criteria to be eligible?

Yes, just a few. You’ll need to be a UK resident, aged 18-39, and you can have more than one LISA but can only fund one each tax year. You can only use the money for a retirement fund (withdrawn after age 60). 

Ready to get started?

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Download and sign up

Install the Beehive Money app and sign up to be added to the waiting list. You can sign up for news and updates here too.

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Select Retirement LISA

Once you have access to Beehive account, log in and select the Retirement Lifetime ISA and complete the application form.

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Set goals, achieve milestones

You’re more likely to achieve your dream if you set goals. Our goal tracker and a helpful milestone will help motivate you to save for a brighter retirement.

Your savings are protected

Your savings will be protected up to a total of £85,000 by the Financial Services Compensation Scheme. There’s more about that here.

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Looking for something different?

Don’t sweat it, we have a range of accounts you can choose from. Check them out below.

Homebuyer Lifetime ISA

Moving into your first home is easier with the Homebuyer Lifetime ISA  thanks to a generous 25% Government bonus. Plus, get mortgage advice when you're ready.

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Easy access

Our easy access account is a flexible account with very few restrictions, which makes it a great choice for those who want to put away money but be able to access it at any time, without charges or penalties, and it’s never, ever ‘locked’ away.

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All savings accounts

Not sure about which account you’re after? Whatever your goals and however you’d like to save, we have a range of accounts for almost everyone at Beehive.

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