Today (14 September) Holly Mackay, managing director of Boring Money, tackled Mr Opperman on how savers had already struggled to figure out how best to save for retirement and the extra option of a Lifetime Isa had failed to improve this situation.
Speaking at the Boring Money conference in London, she said: “All this [the Lifetime Isa] has done is introduce another level of complexity.
“We have people that write to us, who are in their mid-30s, who are debating should they get a Lifetime Isa or should they save into a pension. The choice is enormous and they end up doing nothing.”
But Mr Opperman said what Ms Mackay perceived as complexity he saw as “choice.”
He said: “We are responding to the market in that there was a plea from the savings industry for the Lifetime Isa. It was felt that would be a very good product and the previous chancellor [George Osborne] agreed with that.
“It is clear that if you have five choices rather than four then you have a great degree of complication in that choice. But we are providing a genuine choice and a different type of saving that undoubtedly enhances the amount of savers and assists with the way we are saving as a country.
“We are all going to live a lot longer and need to save more.
“It is not a question of pensions being good and Isas being better or worse. I think you can do both.
“The crucial thing with a pension is there is the employer contribution. Each product can work with the same person at the same time. It isn’t an either/or. I think they [the products] should be working together.
“My government brought it in so I think it is a brilliant thing but I think it is also [a good thing] because there was clearly a gap in the market. There was a great need for it. We have been able to transform the way that type of saving is undertaken.
“Clearly it is working with pensions. There is a difference between the state pension and auto-enrolment. Auto-enrolment and the Lifetime Isa can co-exist together.”
Back in May a survey by CoreData showed 34 per cent of those planning to invest in the Lisa will cut the amount of money they put into their pension, while 7 per cent will stop saving into it altogether.
The findings prompted growing concerns that the Lisa could be the next mis-selling scandal on the horizon - as predicted by Ros Altmann, former pensions minister, last September.
She warned the Lifetime Isa isn’t even close to being as beneficial as a pension post retirement freedoms.
Baroness Altmann said: “In my view Lifetime Isas risk poorer pensioners in the future and it is a disaster in the making.
“This product has mis-selling written all over it. Just think about it from a customer’s perspective. The Lifetime Isa isn’t a simple product. It needs somebody to understand the whole environment."
Nearly half of the 267 people polled by Coredata between March and April 2017 who said they were planning to invest in the Lisa said they will not alter their pension contributions as a result of putting cash into the Lisa.
A pension is tax-free when you pay into it - so the taxman contributes an extra 25 per cent to the amount paid in by basic rate taxpayers - but money taken out after the age of 55 is taxable.
A Lisa is the exact reverse. You will have already paid tax on contributions into it, but money taken out will be tax-free.
emma.hughes@ft.com
