Pensions - Articles - Pensions are not a government bank account say Portal

 People earning over £150,000 will have their annual allowance gradually cut from £40,000, reducing to £10,000 for earnings of £210,000, under new Conservative plans to increase the inheritance tax threshold. This is in addition to the Government’s announcement in the latest Budget to reduce the lifetime allowance from £1.25 million to £1 million.

  

 The recent assault on pensions undermines the Government’s sustained efforts to make retirement saving more attractive, through policies such as auto-enrolment, and risks discouraging people from saving their money in pensions.

  

 Jamie Smith-Thompson, managing director of Portal Financial, says: “Policies such as this send a mixed message from the Government – on the one hand we have seen a number of positive changes, but then there are these announcements that risk reducing the incentive to save early. This policy is so ill-thought out that it does not consider the size of the pension fund, so if a high earner has a very small pension they still cannot contribute more than the £10,000 a year.

  

 “Successive governments have changed tax relief policy on pensions, and in the past five years alone we have seen a reduction in annual allowance from £255,000 to £40,000, and the lifetime allowance has almost halved from £1.8 million to £1 million. How can anyone be expected to save in confidence if the rules and allowances keep changing? What pensions need now is a period of calm, for the latest changes to settle and be understood, otherwise the Government risks undoing its own hard work in promoting them.”