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Neil MacGillivray: Workplace Isa is not dead yet

neill macgillivrayJames Hay’s Neil MacGillivray has warned that the idea of a Workplace Isa is not dead as a change in political circumstances could put the concept back on the agenda.

The improvised nature of policymaking combined with the amount of money the Government could save from a Workplace Isa means it could be introduced in the future, the platform’s  head of technical support argues.

This is despite the fact the amount the public has put into personal pensions has been increasing while contributions to Isas have been declining.

Annual contributions to personal pensions went from £20.4bn 2007/08 to £24.6bn in 2016/17, a historic high.

Conversely Isas including those which have been set up in the last three years such as the Help to Buy Isa and Lifetime ISA have had a slower take up rate than estimated.

MacGillivray quoted Government figures which show only £77m has been put into Help to Buy Isas since they launched in December 2015, far lower than an original £700m estimate.

The Lifetime ISA that launched in April 2017 has a similar story with few takers here as well.

Speaking at a James Hay seminar this week, MacGillivray said: “Is the Workplace Isa dead or dormant? I am confident it is dormant. Although George Osborne who pushed it when he was chancellor is gone the reasons for him pushing it are not.

“Someone could look at the Workplace Isa in the future and think it is a good way to save the Treasury money on the sums it spends on tax relief for pensions.”

He also explained why the fortunes of Isas have been worse during the last few years compared to pensions, including little demand from consumers, a low take up from providers and squeezed personal incomes.

MacGillivray added: “Chancellor Philip Hammond is more on the side of pensions than George Osborne. The increase of the lifetime allowance from April this year has probably increased the attractiveness of pensions and auto-enrolment has been a success.

“In the 1990s employers made just 9 per cent of the contributions to pensions but this is up to 59 per cent for 2015/16. The cost of pensions tax relief has also stabilised. But we must remember how policy on pensions works.

“Something is proposed, forgotten about and then resurrected later like collective defined contribution schemes are being now.”



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