An AXA Wealth managing director has warned against turning pensions into “the ready-meal of savings”.
Radical reforms to pensions that enable them to be taxed like ISAs could “do more harm than good”, according to David Thompson.

Mr Thompson, the firm’s managing director of business development and proposition, has echoed concerns of leading figures in the industry.

Phil Loney, group chief executive of Royal London, recently warned the Government against the move, saying that the idea may pose “considerable risk”. George Osborne opened up the possibility of such changes in the summer Budget and a green paper was launched after the Budget to give “careful consideration” to this idea.

According to research published last month by PWC, 40% of working adults would be in favour – preferring this model over the current system.

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Mr Thompson described ISAs as the ready-meal of the savings world while pensions were like the three course dinner.

He said: “ISAs and pensions have been the staple of the savings diet for some time. The simplicity of ISAs has done a great deal to encourage short term saving. “The ready-meal of the savings world if you like.

“Pensions, while popular, have always had more of an air of mystery about them and despite regular attempts to simplify them, they’re still too complicated and something the wealthier benefit from. The three course dinner of savings.

“However, proposals to make pensions more like ISAs have the potential to do more harm than good.”

There is a “much more fundamental need to think about the purpose of these products” than simply tax implications, he insisted.

He said: “Could and should pensions be simpler? Yes, absolutely. We need to be doing as much as possible to remove the barriers that prevent people from saving and investing – but we also need to make sure people understand the benefits of different products and how they can meet different needs. Be it a quick snack or a three course dinner.”