The boss of one of the UK's most well-known pensions companies has slammed the idea of a pension Isa this morning.
When Royal London announced its results for the 12 months ended December 2015 today, group chief executive Phil Loney also took the opportunity to sound a warning to George Osborne not to introduce a pensions Isa, which is thought to be a possible reform that might be unveiled at the next Budget.
"I strongly urge the Chancellor to build on his excellent record of introducing the pension freedoms by reforming the current tax relief system and not abandoning it," said Loney. "He should not take the huge gamble of introducing Isa-style pensions, which would be reckless at a time when the numbers saving into a workplace pension are finally growing, following the successful introduction of automatic enrolment."
Loney also chastised those who advocated an Isa-style scheme, whereby contributions to pension pots would be taxed but withdrawals would not be, as "clearly thinking too short term".
The UK's current pension system sees withdrawals from pensions taxed but not contributions.
"There remains a considerable risk that 'Isa-style' pensions, even with an incentive thrown in, will simply turn people away from long term saving. Savers will lose the certainty of a tax relief system which ensures their saved income is not taxed twice, and be thrown into an Isa-style system where they need to believe that future generations of politicians will not renege on the deal and tax their savings when they come to withdraw. Hands up anyone who really believes that?"
The scathing remarks come less than a week after Steve Webb, former pensions minister who is now director of policy at Royal London, delivered a speech warning Osborne not to have a Gordon Brown moment by fiddling with the pensions system to introduce an Isa scheme.
As for Royal London's results, the company reported new life and pensions business of £6.8bn, up 40 per cent compared to the year before, and total group funds under management of £84.5bn at the end of December 2015, up 2.7 per cent on the £82.3bn reported for the end of December 2014.
Commenting on the results, Loney said:
"The excellent results we have achieved in 2015, and our consistent record of growth in recent years clearly reflect the time and effort Royal London has invested in our products and services over a number of years. The success of our individual pensions and income drawdown propositions has been evident for some time as they continue to perform well in awards voted for by the most discerning of judges, namely the impartial advisers who work on behalf of our customers."