Lifetime ISA sales have fallen short of government expectations, figures published today by HM Revenue & Customs (HMRC) have revealed.
The figures showed 166,000 lifetime ISA accounts were opened last year, shy of the 200,000 anticipated by MPs in the savings vehicle's first year.
The opened accounts brought about total savings of £517 million, or £3,114 per account. The government projected the average amount saved to be £3,500, meaning total savings fell £180 million below expectations.
MPs on the Treasury select committee recently called for the lifetime ISA to be scrapped, following criticism over its 'complexity, its perverse incentives, its lack of complementarity with the pensions saving landscape and its apparent lack of popularity with the industry and pension savers'.
Royal London director of policy Steve Webb said: 'The lifetime ISA is a complex product which seeks to combine elements of the Help to Buy ISA with long-term pension saving.
'It seems that this complexity, plus a lack of providers in the market, has combined to produce a disappointing first year. There is a strong case for the government to think again about whether setting up a rival product to the workplace pension is really the best way to help younger people save for the long term.'
However, Hargreaves Lansdown personal finance analyst Sarah Coles thinks otherwise and suggested the figures present an optimistic picture.
She said: 'The early numbers reflect the measured, steady start of a market with a growing number of providers. And while it’s yet to see the kinds of numbers of a more mature product like the Junior ISA, for those who have taken advantage, the benefits have been enormous.
'Almost 48,000 lifetime ISAs have been opened at Hargreaves Lansdown, and have received bonuses of over £45 million.'
The HMRC statistics also show stocks and shares ISAs attracting a record £28.7 billion in 2017/18.
Coles added: 'Concerns about the outlook for the UK market failed to dent investor enthusiasm, with investors choosing to take a global approach rather than pull back from the market. More than half of the most popular funds bought in an ISA this year are focused outside the UK.'
The overall picture is mixed, with the number of people using ISAs falling to its lowest level since 2000, but the total amount saved continuing to increase to almost £70 billion.