Pensions: Baroness Ros Altmann "delighted" there was not a move to pensions ISA system

James Nickerson
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Altmann said the current pension system is sensible (Source: Getty)

Baroness Ros Altmann is "delighted" that the chancellor of the exchequer did not turn incentives on their head with a move to a so-called pension Isa.

Speaking at the Association of British Insurers' conference, Altmann said that she believes turning pensions into Isas would be a disaster, and would "destroy pensions as we know them".

"I'm absolutely delighted that the chancellor made the decision not to radically reform, or turn on its head, the current system of pension incentives," she added, as she told industry leaders she wanted to work with them to improve confidence in pensions.

"The reason why I think the current pension system is so sensible is that it has got the right behavioural nudges for people. You get an incentive on the way in, we get employer contributions and then when you come to a point later in, you have a built-in break on spending your money too shortly."

Before the Budget, chancellor George Osborne came under pressure to rule out changes to pensions tax relief, with Altmann cautioning against such a move.

Altmann stood against pensions Isas as they would take pension income out of the tax net, though has been supportive of pension liberalisation.

Speaking in the City of London today, Altmann confirmed that there had not been a consensus in government on how to reform.

However, the chancellor did introduce a Lifetime Isa at the last Budget.

Former consumer campaigner Altmann said that she acknowledged there are advantages to the Lifetime Isa, such as when an individual wants to buy a house or for those who are self-employed.

But she added: "If you are an employee, if you have an employer, the best thing you can do is have your money in a work place pension."

"A Lifetime Isa, as far as I'm concerned, is not a pension. A lifetime savings product should be lasting a lifetime" Altmann said, while refusing to comment on whether Osborne agreed.

"We had a consultation, and there was not a consensus as to how best to reform. There are a number options on the table including the status quo, and I'm very pleased we did not go down the route of turning pensions into Isas, and risking people spending all their money as soon as they can because it's tax free and not having money in their 80s and 90s."

The pensions minister also pointed out that when people save in an Isa they usually save in cash, compared to pensions which help people save in assets performing better than cash.

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