A think tank has proposed creating new workplace ISAs and ISA pensions in a move it claims would reduce the deficit by up to £10billion per year.
Ahead of today’s Budget, the Centre for Policy Studies suggested some greater reforms to savings could be of huge benefit.

Michael Johnson, a research fellow at the organisation, argued that replacing current support for occupational pensions with a Workplace ISA would “radically simplify” the UK savings landscape.

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He said: “The manifesto was silent on the matter of the £14 billion of annual tax reliefs in respect of employer contributions. If the Chancellor were to look at this tempting sum, perhaps as soon as in the forthcoming Budget, the prospect of a Workplace ISA, operating within the auto-enrolment arena, becomes all the more attractive.

“This could lead to an ISA Pension, a regular income stream derived from the liquidation of Workplace ISA assets. It would be tax-exempt, consistent with ISAs’ TEE tax framework.”

Last year the Centre for Policy Studies published proposals to abolish all Income Tax and employer NICs relief on pension contributions, to be replaced by a redistributive 50p incentive per £1 saved, paid irrespective of tax-paying status.

The Conservative’s election manifesto proposed reducing tax relief on pension contributions for those earning more than £150,000 a year, reducing it from £40,000 to £10,000 by the time income reaches £210,000.

Mr Johnson said this was “mere tinkering and added complexity” and would do nothing to help the Chancellor meet his target of a balanced budget by 2019-20.

Neil MacGillivray, the chairman of AMPS suggested recently that the new help to buy ISA could mark the beginning of steps towards a new kind of combined pension and saving account.

At the IFP Paraplanner Conference, Mr MacGillivray, from the James Hay Partnership, predicted what he called the PISA.