The government has published a bill containing the specifications for the Lifetime Isa (Lisa), six months after former chancellor George Osborne announced plans for the new product.
As orignally set out in Mr Osborne’s March Budget, the Lifetime Isa, or Lisa, would allow savers aged under 40 to begin putting aside £4,000 a year after tax, and receive a 25 per cent government bonus.
That money could then be withdrawn tax-free either to buy a first home, or to fund retirement.
The design of the Lisa set out in the Savings (Government Contributions) Bill on 7 September did not include the full details of the product, such as the maximum annual contribution, age limit, or the level of the government bonus.
However, it confirmed that penalty-free withdrawals would only be permitted to fund the purchase of a first property, after age 60, or in the case of terminal illness or death.
That put to bed concerns that the government would add complex provisions to the Lisa, such as the ability to borrow from it.
The Bill also contained details of the Help-to-Buy account.
Hargreaves Lansdown responded quickly to the release of the Bill, saying the firm was “well on track” to launch its own Lisa in April 2017.
The firm is one of only a few providers to remain committed to launching a Lisa at the earliest possible date. Zurich has also said it intends to launch a product in April.
Hargreaves Lansdown’s head of retirement policy Tom McPhail said: “The Lifetime Isa presents an opportunity for investors to both save for their first home and for their retirement within one product.
“It is good news for investors that the government has chosen not to delay the launch of the Lifetime Isa, as we know investors are keen to take advantage of it.”
Other product providers have been less enthusiastic about the Lisa.
Aegon UK and Standard Life, recently said they would not be ready to launch in April, and urged the government to delay its introduction.
Aegon UK went so far as to call for the Lisa to apply only to first-home purchases, and not to saving for retirement.
The Lisa has also been heavily criticised by the two most recent pensions ministers, Steve Webb and his successor Baroness Ros Altmann, with the latter saying it had “damaging behavioural incentives”.