For the third time under the Coalition Government the Lifetime Pension savings will be trimmed, the Chancellor George Osborne confirmed. Where will this end?
For the third time under the Coalition Government the Lifetime Allowance for pension savings is to be reduced, the Chancellor George Osborne confirmed in his 2015 Budget.
The allowance will fall from £1.25 million to £1million from April 2016, after being cut from £1.8 million to £1.5 million in April 2012 and then to £1.25 million in April 2014.
It means that after savers have pulled together total pension savings of £1million, tax is paid at a rate of up to 55%.
The Chancellor said that fewer than 4% of pension savers currently approaching retirement will be affected. And from 2018 the allowance will rise in line with inflation.
Critics said the news was disappointing and will in fact affect a significant number of savers, as well as creating further overall uncertainty around pension savings.
“A £1m pension pot may seem huge, but with improvements in health and life expectancy, people who retire at 60 may need to use their pension income to cover their costs for 30 years or more,” said Steven Cameron, regulatory strategy director at Aegon.
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