The Scottish National Party’s pension spokesperson Ian Blackford has labelled the government’s reasons for introducing the LISA as “bunkum”.

Blackford made the comments in the House of Commons during the second reading of the Savings (Government Contributions) Bill yesterday.

He reference the Treasury’s impact assessment on the Lifetime ISA which stated: “The government could have done nothing more, relying on existing tax incentives to promote saving among younger people and working families on low income. However, this would have failed to provide the necessary level of support for those who are unable to use existing support to plan and save for their future.”

However, Blackford declared this as “bunkum” as the government could have instead addressed tax relief and also has the potential to strengthen auto-enrolment and pensions savings. He said that by introducing this Bill, which makes provisions for the LISA, the government is “undermining pension saving”.

“We cannot get away from this: anybody saving into a pension does so out of pre-tax income. Anybody investing in the LISA will be doing so out of taxed income. That is unfair and unjust. As I mentioned earlier, this is more about a wheeze for the government to generate taxation income. It is wrong and they should not be doing it without proper incentives for the young people they are targeting,” he explained.

In addition, he said that the government needs to “revisit the issue of pension tax relief to make it fairer to pension savers”. In particular, he noted the flat rate pension of tax relief which has previously been suggested as a way to increase saving among low earners.

“While ensuring pensions remain an attractive investment for higher earners, it would be inherently fairer. Coupled with auto-enrolment, it would give a powerful boost to the pensions of millions of workers and help the vast majority of people to save more for retirement. It would also end the complexity of the current regime and set tax relief at a sustainable level for the longer term.”

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