Treasury 'could destroy pensions', warns former Minister

Ros Altmann, former pension minister, has issued dire warnings about the government’s plans for pensions. Is she right?

File photo dated 17/04/15 of former pensions minister Baroness Ros Altmann, who has said the Government should provide tax break

Ros Altmann, the former pensions minister, has issued a dire warning that the Treasury could be about to destroy the pensions saving system. She tweeted: "If you care about pensions, be very very worried."

Her concern centres on a new infographic the Treasury has put together to demonstrate the options for saving for the long term. It starts out on the savings 'pathway' with the Child Trust Fund and Junior ISA, before progressing to the Help to Buy ISA, the Lifetime ISA, Premium Bonds, and ISAs.

When it gets to the point of retirement, the guide states: "The Lifetime ISA can also be used to save for retirement. From your 60th birthday you can take out the savings for any purpose."

As Altmann points out, at no point on the pathway does the guide mention pensions. In a subsequent tweet she said: "HM Treasury should be ashamed of a public information campaign that fails to mention the best way to save for later life."

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Why does the Treasury hate pensions?

The problem, Altmann says, is that the Treasury looks at pensions in terms of the amount of money it costs them in tax relief. Because they are so expensive, under George Osborne, the Treasury was trying to mastermind a move away from pensions, and towards ISAs as the country's primary savings vehicle. This, she highlights, overlooks the benefits of pensions entirely.

The Treasury has denied the document is misleading, and says it is a 'snapshot' of the options, rather than an exhaustive list. However, the experts remain unconvinced, with Altmann tweeting: "Of course it's misleading. To talk about ISAs 'and other options' without mentioning pensions is a disgrace.

An alternative theory

Tom McPhail, head of retirement policy at Hargreaves Lansdown, is less convinced there is a plot to kill off pensions. He says: "I think this is a cock up rather than a conspiracy. I don't think the Treasury is deliberately trying to suppress the benefits of pensions. I doubt they sat around a table and said "Let's not tell anyone about pensions". However, it's symptomatic of a failure within government to approach savings policy in a coherent and structured way."

He adds: "The Treasury and the DWP are increasingly pulling in diametrically opposing directions, and the situation requires someone senior to bring together ministers and civil servants from both departments to agree a single coherent policy."

Altmann also blames the failure on a disconnect between the departments. She wrote on her blog: "During my time as Pensions Minister, there was clearly a difference view between Treasury and DWP about private pensions. The Treasury sees them as a cost to the Exchequer. DWP sees them as a benefit for people to give them a better standard of living. That is how most people see them and why they are so important."

What happens next, and whether the days of pensions are numbered, depends to a great extent on the position taken by Chancellor Philip Hammond. McPhail says: " We don't yet know where Philip Hammond sits on all of this. I have had conversations with junior ministers and civil servants and I think we will get a better sense of where he intends to go as the year progresses."

It seems, therefore, that we will have to wait to see whether Altmann's worst fears are realised, and whether the government is set on a path to destroy pensions.

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