Pension Isa will not die with Osborne – Webb and Altmann

Pension Isa will not die with Osborne – Webb and Altmann

Former chancellor George Osborne’s controversial drive to make pensions more like Isas is set to continue despite his exit from the Treasury, former pensions ministers Steve Webb and Baroness Ros Altmann have said.

Both told Financial Adviser they believe such a policy would be disastrous for the long-term savings of ordinary people, but that the will to keep pushing for the radical reform remained with Treasury ministers and officials.

Mr Webb singled out new chief secretary to the Treasury David Gauke – the department’s second-in-command – as being particularly in favour of the Isa model.

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He also claimed that Mr Osborne would have had “a team of civil servants who are still in place who will have the same sympathies, not least as they prepare the legislation for the Lisa”.

He said the new ministers, including Chancellor Philip Hammond, were unlikely to have strong views on the subject, meaning the momentum was “likely to continue in support of the Isa approach, at least in the short term”.

However, Mr Webb said the Treasury would wait to see how the Lifetime Isa – due to be available from 2017 – was received, and then gradually “increase the scope and scale of it”, such as making it a valid option for auto-enrolment.

Baroness Altmann echoed Mr Webb’s view, saying senior figures at HM Treasury were in favour of the Isa model.

She chose not to name names, but said a move to the Isa’s ‘tax, exempt, exempt’ (TEE) model would “destroy pensions” because it had “all the wrong behavioural incentives”.