Former pensions minister calls Lifetime Isa an 'abomination'

Former pensions minister calls Lifetime Isa an 'abomination'

Former pensions minister Steve Webb has called the Lifetime Isa an "abomination".

Speaking at an Assocation of Member Directed Pension Schemes conference held earlier this week, he said: "One thing the Treasury didn’t do is talk to the DWP, and there’s certainly a precedent for that.

"So when the chancellor stands up and announces Lifetime Isa whether they even thought about the impact on workplace pensions I very much doubt it because to the Treasury tax and Budget is nobody else's business in government.

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"Take your average 20 something renter who probably isn’t saving for anything, has just been auto-enrolled into a pension for the first time - are they going to save in two separate financial instruments, they want a house, are they really going to save in a workplace pension and take out a Lifetime Isa, I don’t think your average struggling 20 something year old would do that."

In May this year, the vast majority of self-invested pension providers viewed the Lifetime Isa as a “direct attack” on the pensions industry, a survey by the Association of Member-Directed Pension Schemes found.

Almost nine out of 10 of the 89 AMPS members surveyed at the time said the new Isa, which was announced by chancellor George Osborne in the March Budget, would undermine pensions.

The Lifetime Isa gives savers aged less than 40 the option of using the money saved in the wrapper as a deposit on a first home, or towards their retirement.

Investors can save up to £4,000 each year in a Lifetime Isa and receive a government bonus of 25 per cent – that is a bonus of up to £1,000 a year.