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| Budget: Pensions to get boost as tax-free limit to rise | |
| (32 minutes later) | |
| The total amount that workers can accumulate in their pension savings before paying tax is expected to be increased in Wednesday's Budget. | |
| The final figure hasn't been confirmed, but people are expected to be able to save up to £1.8m over a lifetime, up from £1.07m currently. | |
| The policy would be aimed at stopping people from reducing their hours or retiring early due to the tax charges. | |
| Persuading workers to work for longer is part of UK plans to boost growth. | |
| The chancellor could also increase the £40,000 annual cap on tax-free contributions to pensions, to £60,000. | |
| It is expected millions could benefit from the rise, including those who have worked in the public sector for many years. There has been a particular focus on doctors and consultants - some of whom have retired early or reduced hours for pension tax reasons as the NHS has become increasingly stretched. | |
| UK economic growth has flatlined in recent months and the Bank of England expects the UK to enter a recession this year. Many industries have struggled to recruit workers, though job vacancies are falling. | |
| What are pension allowances? | |
| The so-called lifetime allowance is the total amount of money you can build up in a workplace defined benefit pension scheme and savings in a defined contribution pension before you face a further tax charge. The tax is levied on the excess over the allowance. The state pension is not included in the calculation. | |
| Who are the millions of Britons not working? | Who are the millions of Britons not working? |
| Why the chancellor wants this Budget to be boring | Why the chancellor wants this Budget to be boring |
| When is the Budget and what could it mean for my money? | When is the Budget and what could it mean for my money? |
| The charge comes at certain times, such as when you start to draw a defined benefit pension. The allowance had been scheduled to remain at £1.07m until 2025-26. | The charge comes at certain times, such as when you start to draw a defined benefit pension. The allowance had been scheduled to remain at £1.07m until 2025-26. |
| It has been seen as a particular issue in the medical profession, leading to some doctors and consultants reducing their hours or retiring early from the NHS because they were in danger of breaching the allowance. They calculated that continuing to work was counterproductive for their finances. | It has been seen as a particular issue in the medical profession, leading to some doctors and consultants reducing their hours or retiring early from the NHS because they were in danger of breaching the allowance. They calculated that continuing to work was counterproductive for their finances. |
| The annual allowance is the amount you can build up each year, before facing a tax charge, and has been subject to much of the same debate. | The annual allowance is the amount you can build up each year, before facing a tax charge, and has been subject to much of the same debate. |
| This is expected to rise to as much as £60,000 from the current £40,000. | |
| Wider employment picture | Wider employment picture |
| UK economic growth has flatlined in recent months and the Bank of England expects the UK to enter a recession this year. Many industries have struggled to recruit workers, though job vacancies are falling. | UK economic growth has flatlined in recent months and the Bank of England expects the UK to enter a recession this year. Many industries have struggled to recruit workers, though job vacancies are falling. |
| The latest official figures show that although job vacancies fell for an eighth consecutive month, the number of vacancies remains high at 1.1 million. | The latest official figures show that although job vacancies fell for an eighth consecutive month, the number of vacancies remains high at 1.1 million. |
| The government has been considering plans to coax retired middle-aged workers back into jobs to try to boost the economy, with reports older workers could be offered a "midlife MoT" to assess finances and opportunities for work. | The government has been considering plans to coax retired middle-aged workers back into jobs to try to boost the economy, with reports older workers could be offered a "midlife MoT" to assess finances and opportunities for work. |
| Earlier this year, Mr Hunt pledged to consider changes to encourage the over-50s who had taken early retirement during or after Covid to return to work, saying he "would look at the conditions necessary to make work worth your while". | Earlier this year, Mr Hunt pledged to consider changes to encourage the over-50s who had taken early retirement during or after Covid to return to work, saying he "would look at the conditions necessary to make work worth your while". |
| Related Topics | Related Topics |
| Personal finance | Personal finance |
| Jeremy Hunt | Jeremy Hunt |
| Pensions | Pensions |