Last month the IFoA wrote to the UK government to suggest a range of measures that would allow the insurance and finance sectors to respond more effectively to COVID-19. One of the measures in the letter proposed that the rules on Lifetime ISAs could be relaxed for a period of time. This would allow consumers to access money from these vehicles without ending up worse off.
The IFoA argued that this could be achieved by changing the exit penalty from 25 per cent to 20 per cent. This meant the account holder would only pay back any government bonus received and not the additional withdrawal charge of 5 per cent.
Today, in line with the IFoA’s suggestion, HM Treasury has announced a temporary rule dropping the charge on unauthorised withdrawals to 20 per cent for the period between March 6 2020 and April 5 2021.