TISA Comments on pension related changes in the 2023 Spring Budget
Commenting on pension related changes in the 2023 Spring Budget, Renny Biggins, Head of Retirement at TISA said: “We welcome the news that the lifetime allowance charge is due to be removed with the subsequent abolishment of the lifetime allowance itself. It made little sense to us to have a limit on annual pension contributions whilst also having a limit on the total fund value you can achieve before incurring additional tax charges. Removal of the LTA is an action we have long campaigned for.
The increase in the annual allowance, which has been frozen at £40,000 for several years is also welcome but these changes will have little impact on most individuals and households whose typical annual contributions and total pension entitlements fall well short of these limits. We have a looming pension crisis ahead for Generation DC (Defined Contribution). Many consumers will have no option other than to work for longer, not because the thresholds enable them, as the proposed measures would suggest, but simply because they won’t have enough wealth to retire.
“The Government needs to consider how to improve the pensions savings amongst lower earning individuals and how to make the spread of tax relief and incentives more equitable.
“We are also pleased to see the current Money Purchase Annual Allowance (MPAA) rise from £4,000 to £10,000, which is something we have been campaigning for. This was not only impacting the wealthy – a person on £35,000 would exceed the £4,000 limit if total employer and employee pension contributions are 12% or more. The restoration of the £10,000 limit provides a growing number of those who have had to access their pension pots early with the opportunity to replenish it.”