Budget: Saving for Retirement

Lord Flight Excerpts

Thursday 16th March 2017 Lords Chamber

[Baroness Neville-Rolfe]

I certainly do not take such a gloomy view of the products. The NS&I investment bond, which we started on, gives a rate of 2.2% for three years. That is significantly higher than the market average of 1.38%. Savers know that they can trust products offered by NS&I. Obviously, rates of return on savings products have come down and that has to be reflected, but the £7 billion of additional government financing will be at a cost of £295 million compared to borrowing through gilts.

[Lord Flight (Con)]

My Lords, while ISAs have their place, does the Minister not agree that pension schemes are the more attractive—and, tax-wise, the more generous—vehicles for people to save for their retirement? Does she also agree that many people have perhaps been mistaken in cashing in their pensions and incurring tax liabilities, when it would have been better for them to leave them to accrue for the ultimate stage of retirement?

[Baroness Neville-Rolfe]

I agree with my noble friend. The Government are at pains to make sure that our communications draw attention to the value of pensions on automatic enrolment, because of course the employer makes a contribution as well as the employee, and this has been a very important reform. However, ISAs, which now have an allowance of £20,000 from next month, and the lifetime ISA, which is particularly helpful to younger people and the self-employed, also have a place. We want to encourage people to save and I am glad that we are doing so.