The initiative is designed to encourage saving among younger generations by offering up to £1000 each year to savers until they reach 50, with 88% of young investors citing this bonus as a reason for opening an account.
It was also found that 76% believe the product will encourage saving for the future, due to a 25% charge on any money withdrawn before the age of 60, unless it is for a first home purchase, or in the event of a terminal illness.
The Share Centre director of customer experience, Darren Cornish, said: “If you are aged 18-39 and looking to supplement your pension savings or save for your first home, the LISA is a fabulous opportunity.
“The government’s bonus on offer makes the LISA very attractive to younger investors, with up to £32,000 in ‘free’ money available if you are able to open an account at 18.
“Also, if you invest in stocks and shares through your LISA, there is the prospect of investment returns too, all free of income tax and capital gains tax.”
The research involved a survey of 150 investors aged 18-39 in February this year, finding that 35% like the flexibility that the LISA offers by enabling saving for a first home, as well as for retirement.
In addition, despite discouraging people to take money out before the age of 60, 13% think the withdrawal charge is a good feature of the product, which launches on 6 April.
However, there are concerns that the LISA could be so attractive that it encourages employees to opt out of automatic pension enrolment, something that the Centre for Policy Studies independent research fellow, Michael Johnson, does not want to see happen.
He said: “We now have an opportunity to reinforce automatic enrolment, by expanding its reach into the LISA. Auto-enrolled employee contributions, made with post-tax income, should be payable directly into the employee’s LISA.
“They should also be eligible for the Treasury’s bonus, and subject to the same tax, withdrawal and penalty rules as other LISA savings, and in parallel, a workplace ISA should be introduced to house employer contributions.”
Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession