Pensions - Articles - Call on government to lift cap for rebuilding pensions


Former pensions minister Steve Webb has issued a call to the Treasury to relax rules which could act as a barrier to people seeking to rebuild their pensions when the current crisis is over.

 Steve Webb, who is now a partner with pensions consultants LCP, highlighted two groups whose pensions may be particularly hard hit by the current situation:
 - Those aged 55 or over who access their pension pots for emergency cash to tide them over;
 - Those whose investments have fallen substantially in value in recent weeks as markets have tumbled, especially those who are already drawing on some of their pension;
  
 In both cases, these groups may be looking to rebuild their pensions in months and years to come. But if they have taken taxable cash from a ‘pot of money’ or Defined Contribution pension then they are likely to be hit by a strict limit on future pension contributions.
  
 Under the rules of the ‘Money Purchase Annual Allowance’, in most cases those who have taken taxable cash are limited in future to £4,000 per year in contributions on which pension tax relief can be claimed.
  
 Now Steve Webb is calling for that £4,000 to be lifted, at least to the £10,000 cap which applied when the MPAA was first introduced, if not abolished altogether.
  
 Commenting, Steve Webb said: ‘Many people will have seen the value of their pension savings tumble in recent weeks, and others may feel that they have no choice but to access their pension savings to tide them over short-term financial pressures. In both cases, pension savings could be severely dented. Once the present crisis is over some people will be in a position to start building up their pension again, especially if they are still in work. The government must support people in this rather than put barriers in place. The current £4,000 limit is far too low. If it cannot be abolished altogether it should at the very least be raised to the £10,000 figure from a few years ago. Rebuilding pension savings is going to be a challenge for many, so the government needs to show it is on people’s side, not standing in their way’.
   

Back to Index


Similar News to this Story

PASA announces Origo as partner for Pensions Dashboard
The Pensions Administration Standards Association (PASA), the independent body dedicated to driving up standards in pensions administration, today ann
New COVID19 pension guidance published for employers
New guidance setting out how employers can meet their automatic enrolment (AE) duties as they navigate the effects of the coronavirus pandemic has bee
Aegon comment on the latest guidance for employers from TPR
ommentary from Aegon’s head of pensions, Kate Smith, on the latest guidance for employers from the Pensions Regulator (TPR).

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.