A former pensions minister has hit out at the Treasury, calling it the “biggest barrier to pensions policy”.
It is “shocking” that the Treasury has supported the introduction of new forms of Isas such as Help to Buy and Lifetime Isas but resists other reforms that would boost pension savings but would require upfront tax relief on individuals’ income, said Sir Steve Webb, who was a Liberal Democrat pensions minister in David Cameron’s coalition government.
“It is shocking that the biggest barrier to pension policy is the Treasury. Because every time you put a pound in a pension, they miss out on some tax today,” said Sir Steve, who is now a director of policy at Royal London, a life insurer and pensions company.
By contrast, Isa savers pay tax on their salary and can avoid further tax down the line by placing their after tax income in an Isa.
As an example, Sir Steve pointed to recommendations from a 2017 government review that remain on hold, including expansion of auto-enrolment to cover 18 to 21-year-olds.
The introduction of auto-enrolment – the automatic deduction of pension contributions from employees’ salaries unless they opt out – has delivered a boost to the pensions industry as more workers are now saving into defined contribution pensions, which are invested in shares and other assets.
The number of people putting money into defined contribution pensions has risen almost ten-fold to 9.8 million since 2013, official figures show.
— to www.telegraph.co.uk