Pension savers call for Annual Allowance to rise in line with inflation at this week’s Spring Budget

dailyrecord.co.uk:

New research from leading online pension provider, PensionBee, reveals that increasing the Annual Allowance could be the most popular change to pension tax allowances in the upcoming Spring Statement on Wednesday.The majority of pension savers (64%) feel the Annual Allowance, the amount they can save into their pensions tax-free each year, should rise in line with inflation.

This view was most consistently held by those over the age of 55 (66%), who are at, or close to, retirement age.Adjustments to both the Annual Allowance (currently £40,000 or up to your maximum earnings) and the Lifetime Allowance (£1,073,000) have been rumoured, as part of an ambitious drive to stop professionals from retiring earlier and to encourage those over 50 to return to work.

When asked about increases to pension allowances by PensionBee, over a third of respondents (37% and 36% respectively) expressed a desire to see the current Lifetime Allowance unfrozen for the 2023/2024 tax year, and the Money Purchase Allowance increased from £4,000.Other ‘pension wishes’ for this week include the implementation of a universal rate of pension tax relief (of 25-30%) to be applied to all pension savings, regardless of a person’s tax bracket.Over half of pension savers (53%) expressed a desire for a less complex pension tax system.

Recent analysis from PensionBee revealed the UK’s highest earners left a whopping £1.3 billion of unclaimed pension tax relief to the taxman between 2016/17 and 2020/21.Following the announcement of the UK Government’s intention to reduce the age of Auto-Enrolment from 22 to 18, the survey responses suggest that further measures to extend its reach to more savers could be popular.