Liam Roberts had only just finished university, but he was already thinking ahead to how to buy a home and fund retirement.

In 2018, he was looking for a way to build up some savings, and so he chose a Lifetime ISA (LISA).

Anyone under 40 can open a LISA to either help save towards retirement or buy a first home. Savers can put in up to £4,000 a year and the government will top it up by 25%.

“It is an excellent product,” says Liam, now aged 28. “The government paid £4,000 towards my first home.”

He bought a two-bedroom home in Manchester in 2022, using the cash savings and government bonus to help pay the mortgage deposit.

That LISA was automatically closed, and so, after getting his job as an asset manager, he opened another one.

This time it was a stocks and shares LISA, for even longer-term retirement plans. Again, he puts in the maximum £4,000 a year, and gets the 25% government bonus. He can start making withdrawals, without a penalty, from the age of 60.

“They are designed for long-term planning,” he says.

In a job that involves reading financial products, he knew what he was signing up for, and that it would work well for his circumstances.

Not everyone has the same knowledge, though, or the same opportunity to make the most of the benefits of the LISA. There remains a limited number of providers, with High Street banks and building societies not among them.

The influential Treasury Committee of MPs has said the LISA is ripe for reform, as the commitment of taxpayer funds is involved.

Many of you have got in touch via Your Voice, Your BBC to express your dismay about the product’s pitfalls.

At the heart of these concerns are two issues:

• the penalty involved in withdrawing money early, which means people face losing 6.25% of their own savings
• the cut-off which means LISA savings can only be used when purchasing a property up to a value of £450,000 – a threshold that has been unchanged since LISAs were launched in 2017, despite rising house prices particularly in south-east England

Those who have been in touch have hit out at the penalty, particularly after being caught out by the £450,000 limit.

One of those was Holly from London. The 28-year-old says she lost around £750 when she bought her home in 2023.

“I was very upset because I’d been using it to save for a house since I was 19 and I did actually use the money to buy my first home as the scheme intended.”

She says at 19 the chances of buying a house over £450,000 felt very remote but then her career was going well and she met her future husband.

“What annoys me is that I bought the home with my now husband and my share is well under £450,000 but of course that wasn’t taken into account,” she says.

Daniel Slavin set up a LISA in his 20s. At the time, as a single person, he understood why the thresholds were there and thought it was a good product.

But fast-forward a few years, and now married, when it came to buying a house, he and his wife Lucy fell foul of the £450,000 limit.

While they were still able to buy without needing to use their LISA, Lucy says it put them in a difficult financial position.

“It is incredibly frustrating knowing that if we need to withdraw the money our only option is to lose part of our savings,” says the 32-year-old, who works as a research specialist for a charity.

“I can understand losing the bonus if you withdraw early but the penalties are awful.”

Daniel, 33, who’s a doctor, has since stopped paying into his LISA.

“The current government wants us to buy houses and increase growth and I don’t think they should penalise us for doing the right thing and saving money,” he says.

They need to take inflation into account, he says. “They should change the rules.”

Commentators and campaigners are keen to see changes.

Martin Lewis, founder of MoneySavingExpert, says the £450,000 threshold is “unjust, unfair and the rules need changing”.

“If a LISA is used to buy a property above the threshold, there should be no fine, they should get back at least what they put in,” he said.

“And this flaw doesn’t just hurt those with LISAs. It puts off many young people, especially from lower income backgrounds, who tend to be more risk averse, from opening LISAs in the first place.”

Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, says that LISAs had proven popular among the self-employed, who can save for retirement despite not having access to a workplace pension.

However, she called for the penalty for early withdrawal to be eased, and the age limit for opening a LISA to be extended.

LISAs were launched under the then-Conservative government in April 2017.

Since then, 6% of eligible adults have opened one, with about 1.3 million accounts still open, according to the most recent figures.

Opinions are clearly divided among those account holders about how well they work.

The government says the LISA is a source of celebration but, in time, it could well address some of their concerns.

“Lifetime ISAs aim to encourage younger people to develop the habit of saving for the longer term, helping them to purchase their first home or build a nest egg for when they are older,” a Treasury spokesperson said.

“We welcome the committee’s report and will now review its findings and respond in due course.”

Additional reporting by Alex Emery, Kris Bramwell and Shanaz Musafer