The Government is pressing ahead with plans to roll out Lifetime Isas despite criticism over the timing and questions over product features.
The Government published its Savings (Government Contributions) Bill yesterday which sets out in legislation how the Lifetime Isa will work in practice.
The Bill reiterates that from next April, UK residents aged between 18 and 40 will be able to open a Lifetime Isa and pay in up to £4,000 each tax year.
Contributions will qualify for a 25 per cent Government bonus.
Savers can continue to contribute into their Lifetime Isa and receive a bonus up to age 50.
Withdrawals can be made to buy a first home worth up to £450,000. They can also be made from age 60, or if the saver becomes terminally ill.
During 2017/18 , those with Help to Buy Isas can transfer their savings built up before 6 April 2017 into a Lifetime Isa without these funds contributing to the Lifetime Isa limit, and still qualify for the bonus.
After April 2018 Help to Buy Isa transfers will count towards the Lifetime Isa limit.
Aegon pensions director Steven Cameron says: “The Bill does not provide the full details we await on the Lifetime Isa but it does confirm the Government is proceeding. As drafted, the Bill implies the Government is sticking with the original core list of events under which the individual can take a penalty-free withdrawal.
“The proposed facility to borrow and repay money without penalty is not covered at this stage. There is no clarity on whether Government bonuses might be paid monthly rather than the original plan of once a year after tax year end.”
Hargreaves Lansdown head of retirement policy Tom McPhail says: “We are pleased the Government has chosen to keep the product as simple as possible. More complexity would only have added to the costs paid by investors.
“Looking further ahead, there are opportunities for the Government to further simplify the savings landscape, by consolidating down the range of different Isas available to investors. This is something we look forward to discussing with ministers in due course.”