Tucked away in a corner of last year’s budget documents was a small but significant line. “The government will publish a consultation in early 2026 on the implementation of a new, simpler Isa product to support first-time buyers to buy a home. Once available, this new product will be offered in place of the Lifetime Isa.”

There was no rabbit-out-of-the-hat budget announcement, no fanfare, no ministerial backslapping. Just a low-key notice that one of the more popular savings products of the past decade will soon be shelved. It seems this news about the future of the Lifetime Isa was intended to fly under the radar.

The Lifetime Isa was announced in 2016 by the then chancellor George Osborne and launched the following year. It was meant to help young people to buy their first home or as a means of saving for retirement. You could shelter up to £4,000 a year tax-free and benefit from a 25 per cent government top-up of up to £1,000 a year. If you withdrew the money for anything other than a house deposit or after the age of 60, you paid a 25 per cent forfeit, effectively losing the bonus and some of your own money.

This week, in an inconspicuous tax newsletter, we learnt that from 2028 the Lifetime Isa is expected to be redesigned to focus solely on first-time buyers. Its secondary role, helping people to save for later life, will be quietly removed and it is being proposed that you only get the bonus once you complete a purchase — you will no longer get it added to your account up front.

The Lifetime Isa had a dual purpose. Open one before 40, use it to buy your first home, or leave it until later life and treat it as a quasi-pension.

It wasn’t a perfect idea by any stretch — mixing housing and retirement was always risky. But it worked in that people understood it and people used it, including me. I made sure I had a Lifetime Isa before my 40th birthday. I’d already bought my first home, but who turns down a free £1,000 a year?

My savings hierarchy was simple: contribute to my pension first, then Lifetime Isa, then Isa. For the self-employed and lower earners, it was even more valuable. They got the equivalent of basic-rate tax relief and, unlike a pension, they could access the money if they needed it. Yes, they’d lose the bonus and a bit more. But for people with lumpy incomes, that accessibility was still comforting.

You could argue that the Lifetime Isa also nudged people into long-term thinking. You could save for your first home, use part of the pot to buy it, and leave the rest as a retirement fund.

Many people also made their first tentative step into investing through a Lifetime Isa — the platforms and brokers that offered them benefited from a cohort of new, fresh-faced investors.

• Scrapping the Lifetime Isa could cost taxpayers £3bn

Under the proposed changes it will be replaced with a housing-only product from April 2028. The retirement element goes. You could argue that is sensible. They should never have blurred the line between property and pensions.

But what happens to the pots built up by people in their thirties and forties? Under present rules, there is no direct way to transfer a Lifetime Isa into a pension. It is an Isa with quirks, not a pension. Without a clear plan, the Lifetime Isa risks becoming a “zombie” product — not dead, not alive, just abandoned.

The UK already has 3.3 million lost pension pots, worth £31.1 billion. Lifetime Isa balances may not come close to matching this, but they matter. The government should be nudging savers to roll them into pensions and bring their long-term savings under one roof. It should form a meaningful part of their retirement planning. For the many “invisible workers” in the UK — freelancers, carers, gig workers and the self-employed — this matters enormously. Many lack workplace pensions and have patchy savings, and for many the Lifetime Isa became their default long-term pot.

• The real reason that savers aren’t investing

There is no guidance for those of us who have been using the Isas to save for retirement, but perhaps that will come. The message may be: keep contributing and collect your bonus. But wouldn’t it make more sense to offer a transfer into pensions, backed by a one-off tax bonus to replace the lost top-up?

For many higher-rate taxpayers, a pension is usually a better option than an Isa because of the tax relief. Yet not everyone knows this. Some still prioritise a Lifetime Isa over their pension. I had this conversation recently with my higher-rate taxpaying sister who does just that.

The government has spent years tinkering with cash Isas in the hope of creating a nation of investors, while the Lifetime Isa has done far more to encourage younger people to start investing and thinking about long-term savings.

Its future should not be reduced to a throwaway line in a government document — because at worst these savings will be forgotten, lost or withdrawn and spent, and at best millions of people will be left asking a very reasonable question: what do I do with my Lifetime Isa now, Rachel Reeves?

Maike Currie is the head of personal finance at the savings consolidation firm PensionBee