The pension lifetime allowance is a policy which places a limit on the amount people are able to put into their pension pot tax free each year. Usually, Britons can expect the sum to increase on the turn of every tax year, by the rate of inflation. However, the Chancellor’s latest announcements have proved this will not be the case going forward.
“For someone paying basic rate income tax on all of this, it equates to £1,740 a month after tax, is not exactly enough to provide a lifetime of luxury.”
Mr Cameron has said the freeze to the pension lifetime allowance is likely to create a significant hit on those who aren’t considered to be very wealthy.
This is because it is these individuals who now have a risk of exceeding the limit and thus facing a significant tax charge.
As savers have diligently placed into their pension pots to achieve the retirement they are hoping for, Mr Cameron raised concerns about the limit.
More to follow…