HM Treasury’s publication of a bill that would enshrine the controversial Lifetime Isa, or Lisa, in law does not make the launch of the product “inevitable”, former pensions minister Baroness Ros Altmann has said.
Baroness Altmann, who has repeatedly warned the Lisa is a threat to pensions, also criticised HM Treasury for failing to provide full details of the design of the Lisa - in particular over whether savers would be able to borrow from it.
Her predecessor as pensions minister Steve Webb, meanwhile, described the bill as doing “nothing to remove the confusion” about what the Lifetime Isa was designed to do.
On Tuesday (6 September), HM Treasury released the long-awaited bill containing provisions for the new savings wrapper that was originally announced by former chancellor George Osborne in his March 2016 budget.
The bill itself left out key details, such as the annual cap, the level of the government bonus and the age limit for setting up a Lisa, though these were included in an explanatory note.
A number of product providers and experts criticised the bill for also missing out details such as provisions for borrowing against the Lisa and when the government bonus would be paid.
A spokesperson for life company Zurich - one of the few providers that has remained committed to launching a product when the regime goes live in April 2017 - welcomed the bill because it was “a good indication of the government’s intention to proceed”.
However, they added: “We are currently reviewing this information and look forward to further details being made available soon.”
Aegon also said more detail needed to be given, with the firm’s regulatory strategy director Steven Cameron saying: “We are pleased that the government has avoided adding complexity to the core design and has kept the Lisa simple. We now urgently await the remaining details.”
Reinforcing her opposion to the Lisa, Baroness Altmann described the product as a “hugely irresponsible way to spend taxpayers’ money”, that could saddle future governments with serious revenue-raising issues.
She said there was not enough time for product providers to design Lifetime Isas by April, given that, in her view, not enough information had been provided.
Baroness Altmann pointed out the Lisa was a much more complicated product than other Isas, which meant product providers need even longer to prepare their offerings.
Former pensions minister Steve Webb, who is now director of policy at Royal London, broadly agreed with Baroness Altmann.
“The publication of this bill does nothing to remove the confusion about what the Lisa is designed to do,” he told FTAdviser.
“We already have a Help to Buy Isa, so it is hard to believe that the Lisa does much that a reform of the existing product could not have done.
“We are told it is not a pension, yet in most cases cash not used for house purchase can’t be touched until you are 60, which looks suspiciously like a pension.
“We are told it is good for the self-employed, but most self-employed people are over 40 and a Lisa can’t be opened over forty.
“So the danger is that it adds little other than confusion, and risks undermining the success in getting millions of under 40s enrolled into a workplace pension”.
In response to criticism the bill left out details of how Lisas would work, HM Treasury pointed to the explanatory note accompanying the bill, which appeared to confirm many of the original specifications laid out by Mr Osborne in March.
james.fernyhough@ft.com
