Lifetime Pension Allowance boost expected in the 2023 budget

According to recent reports, Chancellor Jeremy Hunt is considering an increase in the lifetime allowance for pension savings in the upcoming budget. The move is expected to encourage people to stay in work for longer and benefit millions of workers, particularly those in higher-paying jobs such as doctors and consultants.

Currently, the lifetime allowance stands at £1.07m, and the annual cap on tax-free contributions to pensions is set at £40,000. It is anticipated that the chancellor will be increasing the Lifetime Annual Allowance and may also increase the pension annual allowance to enable savers to contribute more to their pension over their working lives.

The proposal is part of the government’s plan to persuade workers to stay in employment for longer. The lifetime allowance is the maximum amount of money one can accumulate in a defined benefit pension scheme and defined contribution pension before facing further tax charges.

Issues with the current pension lifetime allowance

However, it has been reported that the current allowance has caused issues. For example, in the medical profession, doctors and consultants have reduced their hours or retired early from the NHS because they were at risk of breaching the allowance.

The proposed increase in the lifetime allowance would address this problem and encourage more people to continue working for longer. It is expected that millions of workers would benefit from the rise, providing a boost to their retirement savings.

The move is part of Chancellor Hunt’s wider plan to improve the UK’s economic recovery, with a focus on job creation, investment, and innovation.

Overall, the proposed increase in the lifetime allowance for pensions is a welcome move that will help workers in higher-paid jobs to save more for their retirement. It is hoped that this will encourage more people to stay in employment for longer, boosting the UK’s economy.

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