George Osborne Budget 2016 tax avoidance
Chancellor George Osborne holds up the red box as he sets off from Downing Street to deliver the 2016 Budget to the House of CommonsGetty

The chancellor's ambitious plans for a new "lifetime Isa" could encourage forthcoming generations of OAPs into reckless spending, according to pensions minister Baroness Altmann. George Osborne's proposed new "Lisa" would not be subject to income tax in the same way regular pensions currently are, which the Conservative peer believes would encourage them to withdraw their entire nest egg in one go – potentially leading to "millions of poor pensioners".

The Lisa, which will be available from April 2017, is designed to help savers buy a first home, or to save for retirement past the age of 60. It will allow people, who must be under the age of 40 when they open their account, to put away up to £4,000 a year. The government will then give them a 25% bonus for every £1 that they put in – making for a bonus of up to £32,000 if someone pays in the maximum £128,000 from the ages of 18-50.

Speaking to the Times, Altmann agreed that it would help people join the property ladder, but insisted that there were significant downsides.

"It is vital that we retain incentives for people to keep money for much later life and not spend it at the age of 60," she said. "Lifetime savings need to be for a lifetime, with pensions that last into your 80s or 90s. Otherwise, we will have millions of poor pensioners in future."

Martin Lewis of moneysavingexpert.com says that the Lisa could be useful for savers with extra cash, but that it could be seen as Osborne sacrificing future tax revenues to add to those he gets now.

He wrote: "You can have this as well as a pension. Though remember, this is money that you save from your after-tax income, unlike pensions, which are from your pre-tax income.

"The real cleverness behind this for the Treasury is that if people use this rather than a pension, as it comes from taxed income, it gets the Treasury tax revenue now. If they put it in a pension, the Treasury has to wait years until it gets tax. So, this could be Mr Osborne cleverly grabbing cash out of future chancellors' pockets."