Members of the financial services industry have responded critically to proposed features of a Workplace Isa, unveiled by the Centre for Policy Studies
Michael Johnson, research fellow at the think-tank and the brains behind the recently announced Lifetime Isa, last week published a report arguing the case for a Workplace Isa, a scheme the government is being urged to introduce under the auto-enrolment regime.
The proposed product would sit within the Lifetime Isa, which was announced in the March Budget and will offer a 25 per cent government bonus on contributions when it is launched next April. If the government accepts the proposal, savers who use the Workplace Isa would be able to contribute up to £10,000 a year until the age of 60, when they can withdraw funds free of tax. Savers would not be allowed to access funds before turning 60.
However, some industry figures have reacted scathingly to the report. Iain Mills, Zurich’s UK operational taxes director, said the Workplace Isa would add more complexity to the retirement landscape. He said: “It would cause further distribution to the industry at a time when we need stability as auto-enrolment embeds.”
“We would argue the government to think carefully about any further significant reforms.” Matthew Harris, director of a Financial Planning firm said “I think this is the worst financial sector idea I have seen this year”.
“It would be totally unfair to limit any government bonus system to employees, never mind auto-enrolled employees”. Blair Cann, senior partner at M Thurlow & Co, said “Bearing in mind the relative complexity of retirement planning as it stands at the moment this could make the whole area a nightmare.
“The Centre for Policy Studies is supposed to think the unthinkable, not think the incomprehensible,”
(FTAdviser, April, 2016, Katherine Denham)
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