The initiative, set to launch in April, is open to people aged 18-40 and is designed to encourage saving among younger generations by offering up to £1000 a year to people up until the age of 50, potentially equating to an additional £32,000 in their accounts.
Despite 37% of millennials wanting greater financial help from the government to save money, more than two-thirds are unaware of the incoming initiative specifically designed to target them.
Aegon pensions director, Steven Cameron, said: “With younger generations calling for greater incentives to save, it’s important we highlight the options already out there, with generous incentives for those saving in workplace pensions, and a further option, particularly for first house purchasers, in the soon-to-be-launched LISA.
“Young people face real challenges in saving for a first home while also thinking further ahead to retirement, and any initiatives that get them saving more, or sooner, are a good thing.
Despite many young people being oblivious to the incoming LISA, after a brief explanation, 46% of millennials said they expected to take one out, 32% suggested they would use it to save for a house deposit, and 26% showed an interest in using it to save for retirement.
This has led to calls for more advice to be given to younger people about their savings options, with workplace pensions a more efficient way to save specifically for retirement than LISAs for example.
“Education and information is key, particularly as not everyone will seek financial advice when starting saving. People clearly need to be informed of the options out there, but also which of these is likely to deliver the best outcomes for their needs,” Cameron continued.
“One of the major concerns we’ve had from day one is that younger workers will opt out of their workplace pension, forego valuable employer contributions, and instead save into the LISA. There is a real risk of LISA undermining the government’s successful automatic enrolment initiative.
“But for the self-employed, who don’t benefit from auto-enrolment, the LISA offers an alternative retirement savings vehicle, with particular benefits for those who are basic rate taxpayers.”