Budget 2016: Mixed reaction to Chancellor's Lifetime ISA

George Osborne announced the creation of a Lifetime ISA for people to put towards buying a home in the budget today, but the reaction has been mixed.

The account will be available to any adult under 40 from next April, allowing up to £4,000 to be saved each year, with a 25 per cent bonus from the government.

That money can be saved for retirement or put towards buying your first home, and was billed by the Treasury as a "radical new way for the next generation to save".

But there was a mixed reception from some of the young people the policy was aimed at.

Paul Bassett Davies wrote: “Young people. Save money you haven’t got to put in a pension you’ll get too late to pay for a home you’ll never afford.”

And some people over the age of 40 were feeling a little bit left out by the policy.

Some experts suggested the new scheme heralds the introduction of a "pension ISA by stealth", and will mean future generations increasingly favour Isas, which are built up from taxed income, instead of pensions which are only taxed when the cash is withdrawn.

Martin Lewis, founder of MoneySavingExpert.com, said: "The real cleverness behind this for the Treasury is that if people use this rather than a pension, as it comes from taxed income, it gets the revenue now.

"If they put it in a pension, the revenue has to wait years until it gets tax. So, this could be Mr Osborne cleverly grabbing cash out of a future chancellor's pocket."

Philip Smith, pensions partner at PwC, said: "It's interesting that older savers have not been included in the new Lifetime ISA.

“This may point to a future dual track system, leaving the current pension system in place, but introducing the pension Isa by stealth. Once the market beds down, a change to a fully-fledged pension Isa becomes much easier."