Despite speculation, the chancellor did not include any changes to Lifetime Isa rules in his Budget this afternoon (March 6).
In recent months there have been calls for the scheme’s upper property limit of £450,000 to be increased and the scrapping of penalties for withdrawing cash .
Kate Smith, head of pensions at Aegon, said the omission of the Lifetime Isa was a disappointment for would-be first time buyers and those saving for retirement with a Lisa.
She also said raising the age you can open a Lisa from 40 to 50 would have widened their reach.
Smith said: “Currently, you can’t open a Lisa once you pass age 40, can only contribute a maximum of £4,000 per year, and can no longer contribute once you hit 50.
“Raising the maximum age for taking out a Lisa, say to 50, would have made them available to a wider audience, while allowing contributions to continue, possibly to 55, could have enabled Lisa savers to build up larger sums, particularly if using the product as a retirement savings vehicle.
"The annual contribution limit is also restrictive and has not been increased since introduced back in 2017.
“The current property purchase cap of £450,000 is causing problems for prospective first-time buyers particularly in areas of high property process.
“Omitting a modernisation agenda for Lisas from the Budget is a missed opportunity particularly for those aspiring to be first time buyers.”
The £450,000 upper limit has remained the same since the product was launched in 2017.
A Lisa allows you to put up to £4,000 away each year, until you're 50, with the state giving a 25 per cent bonus every year.
Jim Islam, CEO at Lisa provider OneFamily, was also disappointed not to see any changes announced in the Budget.
He said: “The Lisa is a fantastic product that has helped tens of thousands of people get on the property ladder.
“But more needs to be done to help people buy their first home, particularly given the cost-of-living crisis and high house prices.
“We have been asking for the penalty Lifetime Isa holders pay when withdrawing savings from their account for any purpose other than buying a first home or retirement to be reduced from 25 to 20 per cent.
“Additionally, the £450,000 property cap is outdated and we urge the government to increase this and commit to reviewing this regularly in line with house prices.”
The chancellor did, however, announce plans for a new British Isa which would allow an additional £5,000 allowance which would be invested in UK assets.
A consultation on this proposal has been launched and will run until June.
tara.o'connor@ft.com
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