The "superficial attractions" of the lifetime ISA (LISA) will "destroy pensions", former pensions minister Baroness Ros Altmann has warned.
Writing for The Sunday Times on 24 July, Altmann said LISA, which will allow savers under the age of 40 to put away up to £4,000 a year and receive a £1,000 bonus from the government, is an example of the "worst type of pension policy-making".
Her unguarded comments came just under two weeks after her resignation, decrying government short-termism for damaging pension policy.
In the newspaper, Altmann argued LISA was not sensible and would lead to "disaster" for retirement outcomes.
"The government's recent consultation on reforms to pensions tax relief offered a fantastic opportunity to make brave changes in the interests of the majority of British people.
"Unfortunately, when the consultation finished, short-term political thinking clouded sensible long-term judgment.
"Although the Treasury decided to leave the pensions tax relief system intact, it announced a new product - the lifetime ISA. This masquerades as a pension, but is a Trojan horse that is likely to be a disaster in the long run."
Although the 25% government top-up may be attractive to younger savers, Altmann said introducing tax-fee withdrawals will encourage people to withdraw large sums from their pensions shortly after retirement.
She wrote: "Turning pensions into ISAs is the worst type of pension policy-making - focusing only on today and storing up problems for the future. Lifetime ISAs are unlikely to last a lifetime."
Instead, Altmann called for a "one nation" pension, which would replace tax relief with a uniform government top-up similar to the LISA. Every pension saver could receive a £1 bonus for every £3 put in, while the annual allowance could be reduced to £20,000. Additionally, the lifetime allowance cap could be removed altogether.
Altmann's intervention will boost industry calls for new chancellor Philip Hammond to reconsider introducing the LISA, which is due to be formally introduced next year. Earlier pleas to former chancellor George Osborne warned younger savers would be tempted to opt for the LISA rather than a workplace pension, decimating their potential retirement fund.
Aegon pensions director Steven Cameron said in a separate statement that the Treasury should make the policy simpler in light of conflicting priorities relating to Brexit.
"With the UK having voted to leave the EU, the government needs to give top priority to making sure our exit works as well as it can. This means other initiatives may need revisiting. With this in mind, there may be simpler ways of delivering the aims of the LISA.
"It is not clear how many individuals might use LISA for retirement savings. Employees will almost always be better off saving for retirement through a workplace pension where they receive a valuable employer contribution. There is a real risk of LISA undermining the government's successful automatic enrolment initiative."
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