Yesterday (14 September) was my first up-close encounter with the relatively new pensions minister.
Sorry, to be accurate, the parliamentary under-secretary of state at the Department for Work & Pensions.
Guy Opperman kicked off his appearance at the Boring Money conference by wittering on about his success in launching a community bank in a bid to show off his financial services credentials to a room that included top dogs from the likes of Hargreaves Lansdown, UBS, Vanguard, Investec and Atom Bank.
He admitted his knowledge on pensions “technicalities” wasn’t stellar but pointed to his colleagues at the Department for Work & Pensions as being fantastic at helping him get up to speed.
The fabulous consumer finance champion, Boring Money’s Holly MacKay, put many straight questions to Mr Opperman.
Mr Opperman is either telling tall tales or he genuinely thinks the industry desperately wanted another product to push.She asked about whether the government needed to spell out to the nation they must work for longer and queried whether the Lifetime Isa (Lisa) had just made the minefield of trying to figure out how to save for later life a whole lot worse.
His response reveals his true credentials to be the successor of Steve Webb and Ros Altmann, a pair who not only understood pensions but also are passionate about ensuring people don’t end up unable to heat their homes in later life.
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.”
Is he really trying to claim providers and/or advisers wanted the Lifetime Isa?
Was I asleep while you all took to social media, took out advertising campaigns or hollered from the rooftops that the Lifetime Isa was what it would take to get people setting aside enough cash for a comfortable retirement?
I don’t think I did miss shouting for this product so Mr Opperman is either telling tall tales or he genuinely thinks the industry desperately wanted another product to push.
The fact is former chancellor Mr Osborne wanted to increase his government’s tax take and knew a quick way to do that was to flip retirement savings tax relief on its head.
By switching the nation’s retirement savings habit from a pension to an Isa, the government could have raked in billions of extra cash by stealing funding for the public services for this generation from the next.
If a Pension Isa had gone ahead all pension contributions would have been made out of post-tax income, but thereafter no further tax is payable, either on the investments in the pension fund or on pensions in payment.
Such a reform was attractive to a cash-strapped chancellor, giving him the chance to bring forward billions of pounds of tax revenue from the time when today’s workers retire to the present day.
But with such ferocious opposition from the likes of the Association of British Insurers to this tax grab plan at the last minute Mr Osborne pulled the plug of the Pension Isa, made a few tweaks and rebranded it the Lifetime Isa.
Now, the Lisa isn’t terrible and it is an interesting product to consider for certain clients but to claim it was demanded? Mr Opperman needs to check his facts.
emma.hughes@ft.com
