Pension saving will be important to the millions of Britons who are progressing towards retirement. However, there have recently been concerns attitudes concerning pension saving would have to change due to an important announcement. In his latest economic update through the Budget, Chancellor Rishi Sunak announced changes to the lifetime allowance for pension saving.
The sum, currently at £1,072,100 for the 2020/21 tax year, will be frozen until 2026.
The change has been widely dubbed as a “stealth tax”, impacting the amount Britons will be able to save into their pension each year before facing penalties.
Nonetheless, despite Mr Sunak’s announcement, it appears Britons are not concerned about their retirement funds.
A poll undertaken by Express.co.uk, focusing on a number of issues raised by the Budget, asked readers: “Are you worried about your pension after Rishi’s stealth tax?”
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Indeed, 3,518 people said they were in fact worried about what Mr Sunak’s announcement could mean for their pension saving.
It is estimated the move to change the lifetime allowance may save the Treasury close to £300million by the time it draws to a close.
The move, though, has garnered a certain level of controversy with some experts, who have highlighted the potential issues which may occur.
Some have said the freeze could still affect pension savers who do not consider themselves to be wealthy.
“It is worth noting that this is the first time the allowance has not risen in line with the Consumer Price Index (CPI) since the 2018/19 tax year.
“Traditionally it rises in line with September’s CPI which for 2020 would have been 0.50 percent.
“That means the lifetime allowance of £1,073,100 would have risen by £5,800 in the upcoming 2021-22 tax year and some pensions will now fall into the taxable bracket.”
Ms Springall concluded by encouraging those worried about what the pension changes would mean for them to seek advice about the matter.
The Money Advice Service offers help, as well as Pension Wise which puts forward free and impartial guidance.
Alternatively, individuals may wish to seek the assistance of a financial adviser, who could provide tailored guidance.
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