Mr Osborne was never going simply to give up on his ISA model for lifetime savings. Some initial reactions to “Lifetime ISAs” scented the end of dedicated pension provision. But those who believe in the value of savings being secured for retirement should not be so defeatist.
Pension schemes, even those serving quite highly-paid workers, have many members in their 20s and 30s for whom the savings priority is getting a foot on the property ladder. If the Lifetime ISA is sustained, this will give them a welcome subsidy. What’s not to like?
The worry is, of course, that the innovation may divert savings not stimulate them. Opt outs from auto-enrolment will rise if jobholders value the prospect of access more than the employer’s pension contribution. If they do, the Treasury will harvest a short-term gain, as will employers. Where the State promises insufficient retirement income for people to maintain their standard of living, though, they will still need occupational or personal pension schemes. Those involved in such schemes must remind the world of that, even if we risk being seen as talking our book. We must also press for obligations placed on pension schemes to assure value for members’ money to apply to those providing Lifetime ISAs. Indeed, the regulatory oversight needs to be even closer since ISA investors have no trustees with a mission to look out for them.
17 March 2016
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