"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."
The Bill provides more information on how the LISA will operate, cementing the £4,000 cap on annual contributions and covering details on which withdrawals will escape a financial penalty.
Penalty-free withdrawals will be permitted to purchase a first home of up to £450,000, after the age of 60, if terminally ill or on death.
However, the Government bonus including interest or growth plus an additional penalty of 5% is deducted if money is withdrawn in any other circumstances.
The government is now unlikely to allow the option of borrowing from the Lifetime ISA, which it had previously considered, to the relief of providers who urged the Treasury to keep the LISA simple.
Further details will not be published until the Bill reaches Committee stage in Parliament.
MPs and pension providers had previously raised concerns about the LISA, with DWP calling for "urgent research on any effect of the LISA on pension saving through AE" and Aegon's CEO claiming it 'muddies the waters' between retirement and other forms of savings.
The government confirmed in July that it has no plans to research the impact of the Lifetime ISA on auto-enrolment.
MPs recommended a "communication campaign that highlights the differences between the LISA and workplace pensions" and said the government should make it clear that the LISA is not a pension and that for employees who have been automatically enrolled, "any decision to opt-out is likely to result in a worse outcome for their retirement".
Aegon today says it welcomes the aims of the Lifetime ISA but believes "an April launch remains highly challenging".
However Hargreaves Lansdown remained more positive, stating that its Lifetime ISA product development is "well on track and we expect to be ready to launch our Lifetime ISA for investors in April 2017".
Tom McPhail, head of retirement policy at Hargreaves Lansdown, commented: “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.
“We are also pleased that the government has chosen to keep the product as simple as possible, with penalty free withdrawals limited to first house purchase, withdrawals after age 60 and terminal illness. 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 will simplify savings decisions and so should lead to higher savings rates, as well as saving money for the government, for the industry and reducing costs for investors. This is something we look forward to discussing with ministers in due course.”
