With the Government set to unveil its first Autumn Budget on November 22, much of the talk about what Philip Hammond may do concerns pensions. We take a look at some of the possible ways pensions could be affected by the forthcoming Budget…
Will there be a reduction in the annual pension contribution allowance?
Successive Chancellors have shaved the amount that you can save into a pension from £255,000 a year in 2010-11 to today's £40,000. Doing so would raise a huge amount instantly, so it could very well be something that we see in the budget according to some industry commentators.
Could there be a reduction in the lifetime pension allowance?
The current lifetime allowance is £1 million. Whilst this figure sounds a lot, it actually only buys an annual pension income of around £45,000. The lifetime allowance (LTA) was introduced in 2006/7 at a figure of £1.5 million. It steadily increased to £1.8 million in 2010/11 and 2011/12 but since then has shrunk to £1 million. It is thought by most industry experts that a further cut is unlikely.
Is a reduction in tax relief on pension contributions likely?
Currently, pension contributions attract tax relief at the saver's highest marginal rate. There have been suggestions made that a tax relief rate of 30% would be fairer, though this is debated. It is thought by financial experts that such a move would be unlikely in this forthcoming Budget.
As with any Budget, it's a case of wait and see as to what the Chancellor will actually come up with and just how this many affect pensions, pensioners and pension schemes.