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| Budget: Pensions to get boost as tax-free limit to rise | 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 extra tax is expected to be increased in Wednesday's Budget. | |
| The final figure has not 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 aims at stop 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. | 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. | 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. | 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. One of the main issues raised has been whether enough people who can work, are working. | |
| Many industries have struggled to recruit workers, though job vacancies are falling. 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". | |
| Not everyone believes that boosting allowances is the best policy to meet these ends for the wider working population. | |
| "Increasing them will reduce the damage they do, but even better would be a more thorough reform of how pensions are taxed," said Karl Emmerson, from the Institute for Fiscal Studies, a leading independent think tank. | |
| "High earners with big pension pots do benefit from inappropriately generous tax treatment of pensions, but there are much better ways of restricting this that these crude limits." | |
| What are pension allowances? | 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. | 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. |
| Related Topics | Related Topics |
| Personal finance | Personal finance |
| Jeremy Hunt | Jeremy Hunt |
| Pensions | Pensions |