Draft Individual Savings Account (Amendment No.2) Regulations 2017

Mhairi Black Excerpts

Wednesday 15th March 2017 General Committees

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Evans. The Scottish National party is supportive of any initiative that promotes saving, but the lifetime ISA feels like more of a gimmick. For that reason, the SNP shall not be supporting the Government today.

The lifetime ISA feels like a gimmick because it works only for those who can afford to save to the levels demanded by the Government to get the bonus. It falls short of any real pension reform, and it seems more of a distraction to allow the Treasury access to taxes today, rather than having to wait until tomorrow. This is a missed opportunity to strengthen pension saving, rather than just tinker around the savings landscape. Our amendments at Committee stage of the 2017 Act sought to delay the lifetime ISA until safeguards are built in, such as the right to mandatory advice. We remain unassured and increasingly concerned that the lifetime ISA will undermine auto-enrolment, as it is likely that it will distract from workplace saving, leading to more opt-outs while employees forego employer contributions to their pension.

That is not just the SNP’s opinion. Industry experts maintain that saving via pensions remains the most attractive method of saving for retirement. Pensions offer benefits, including matching employer contributions and inheritance tax breaks. Research conducted by Zurich found that a basic-rate taxpayer saving £100 a month into a workplace pension over 20 years would be £14,000 better off than a person saving into a stocks and shares lifetime ISA. No employee will be better off saving for their retirement in a lifetime ISA than in a workplace pension, according to the Association of British Insurers. By missing out on at least 3% of salary going into their pot from their employer, a saver can expect their fund to be worth about one third less at the point of retirement.

Anything that encourages saving for later life is welcome, but there is a real danger that the Government could undermine auto-enrolment. Although we believe that automatic enrolment has its limitations, and that the UK Government need to do more to advance the system, we still believe it is the best vehicle for incentivising saving and promoting fair universal pensions. After all, the current regime has successfully enrolled 9 million new savers since 2009. We do not believe that the Government should undermine that in any shape or form. For that reason, we cannot support them today.