Pensions annual allowance to be reduced

16 October 2018

Following a report in The Times last week where Chancellor Philip Hammond described pensions tax relief as “eye-wateringly expensive” It is highly speculated that the autumn budget will bring a cut to the annual allowance, reducing the tax relief available to savers.

Sir Steve Webb, director of policy at Royal London and former pensions minister, said time and again, pension tax relief had been the go-to source of money for cash-strapped chancellors.

He said: "Pensions should be a long-term business where people can plan with confidence for their retirement, knowing that the tax rules around pension saving will be stable. We fear that the amount people can contribute into their pensions each year will be cut yet again, sending out entirely the wrong message at a time when we need people to be saving more, not less."

Royal London believe that if the annual allowance were cut down to £35,000 or £30,000 from the current £40,000 it would mean that more than 100,000 higher earners would lose tax relief of up to £4,000 each.

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