Pension: Rishi Sunak secures vote of confidence as Britons ‘not worried’ about saving

Budget 2021: Sunak announces pension lifetime allowance freeze

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Pension saving will be important to the millions of Britons who are progressing towards retirement. However, there have recently been concerns attitudes concerning pension saving would have to change due to an important announcement. In his latest economic update through the Budget, Chancellor Rishi Sunak announced changes to the lifetime allowance for pension saving.

The sum, currently at £1,072,100 for the 2020/21 tax year, will be frozen until 2026.

The change has been widely dubbed as a “stealth tax”, impacting the amount Britons will be able to save into their pension each year before facing penalties.

Nonetheless, despite Mr Sunak’s announcement, it appears Britons are not concerned about their retirement funds.

A poll undertaken by Express.co.uk, focusing on a number of issues raised by the Budget, asked readers: “Are you worried about your pension after Rishi’s stealth tax?”

Some 8,351 readers made their opinions on pension changes known through the Budget poll.

Of those asked, some 45 percent stated they were not worried about their pension as a result of the changes made by the Chancellor.

However, there were still levels of uncertainty expressed by individuals who were unsure about what these changes could mean.

A total of 1,069 Express.co.uk readers said they were unsure of their opinions when it came to the pension changes.

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Indeed, 3,518 people said they were in fact worried about what Mr Sunak’s announcement could mean for their pension saving.

It is estimated the move to change the lifetime allowance may save the Treasury close to £300million by the time it draws to a close.

The move, though, has garnered a certain level of controversy with some experts, who have highlighted the potential issues which may occur.

Some have said the freeze could still affect pension savers who do not consider themselves to be wealthy.

This is because due to inflation, savers could inadvertently find themselves exceeding the limit over a longer period of time, and thus facing a penalty. 

A measured approach to the changes, however, has been recommended at large.

Recently commenting on the issue was Rachel Springall, finance expert at Moneyfacts.

She said: “The freeze in the lifetime pensions allowance may not impact every consumer but it will hit wealthier pensioners and is anticipated to raise millions of pounds for the Treasury.

“It is worth noting that this is the first time the allowance has not risen in line with the Consumer Price Index (CPI) since the 2018/19 tax year.

“Traditionally it rises in line with September’s CPI which for 2020 would have been 0.50 percent.

“That means the lifetime allowance of £1,073,100 would have risen by £5,800 in the upcoming 2021-22 tax year and some pensions will now fall into the taxable bracket.”

Ms Springall concluded by encouraging those worried about what the pension changes would mean for them to seek advice about the matter.

The Money Advice Service offers help, as well as Pension Wise which puts forward free and impartial guidance.

Alternatively, individuals may wish to seek the assistance of a financial adviser, who could provide tailored guidance. 

Do you have a money dilemma which you’d like a financial expert’s opinion on? If you would like to ask one of our finance experts a question, please email your query to [email protected]. Unfortunately we cannot respond to every email.

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