A thinktank has proposed three ways to overhaul the Lifetime Isa including changing the age restrictions associated with the product.
Through the research paper, liberal conservative thinktank Bright Blue, is calling on the Treasury, which is currently reviewing the Lifetime Isa, to change and make the product more simple.
The Lifetime Isa hit the market in April 2017 amid criticism it would mainly benefit the children of the wealthy.
It allows savers between the ages of 18 and 39 to save up to £4,000 a year tax-free and receive a government bonus of 25 per cent. The savings can then be used for either a house deposit or for retirement.
The committee said its inquiry received “strong criticism” of the Lifetime Isa over its complexity, its “perverse incentives” and its lack of popularity with the industry and pension savers.
The report, which is written by Centre for Policy Studies research fellow Michael Johnson, suggests three changes to the Lifetime Isa.
It says the age restrictions on the Lifetime Isa should be scrapped and contributions should be allowed from birth rather than from the age of 18.
The report says in such circumstances, other than a potential £500 starter bonus, the Lifetime Isa would not be eligible for the 25 per cent bonuses until the age of 18 and the account could not be accessed until 18.
The report also suggests the contribution cap of age 40 should be removed but with the caveat that any contributions made from age 50 should be locked in for 10 years.
The report also suggests reducing the penalty for accessing Lifetime Isa savings from 25 per cent to 20 per cent.
The research proposes that employee contributions made under auto-enrolment could be made into a Lifetime Isa and attract the 25 per cent bonus.
Johnson, who is also an associate fellow of Bright Blue, says: “If these three proposals were implemented, then there would be no need for any other Isas. The Lifetime Isa could serve as a single savings vehicle from cradle to grave.”
Johnson adds: “The Lifetime Isa contains a valuable free option; ready access when buying the first home, with accumulated bonuses then retained. Generation Y is slowly discovering that pension pots cannot compete with this.”