Wednesday, 12 March 2014 10:43
'Further lifetime allowance reduction would be bad news'
A retirement planning expert says it would be "bad news" if the lifetime allowance is reduced further in next week's budget.
Andy James, head of retirement planning, at Towry, does not want to see more changes when the Chancellor makes his statement on March 19.
He said: "Bad news for higher saving pensioners could be on its way.
"The Government is being pressurised by some to reduce the £1.25m lifetime allowance yet further, particularly in regard to the 25% (£312,500) of this that can be taken as a cash sum tax-free.
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"At current annuity rates, a £1.25m pension fund would only initially provide an individual with around £40,000 per year in terms of a rising retirement income.
"However, if you have individual protection on your pension savings, you will be able to maintain a personalised lifetime allowance of the value of your pension savings as at 5 April 2014 up to £1.5m."
He said it would be good news, however, if the triple-lock guarantee – which says the basic state pension will annually rise by inflation, average earnings or 2.5 per cent – beyond this Parliament, is confirmed.
He added auto-enrolment and the simplified flat-rate state pension policies still need time to bed in.
Andy James, head of retirement planning, at Towry, does not want to see more changes when the Chancellor makes his statement on March 19.
He said: "Bad news for higher saving pensioners could be on its way.
"The Government is being pressurised by some to reduce the £1.25m lifetime allowance yet further, particularly in regard to the 25% (£312,500) of this that can be taken as a cash sum tax-free.
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"At current annuity rates, a £1.25m pension fund would only initially provide an individual with around £40,000 per year in terms of a rising retirement income.
"However, if you have individual protection on your pension savings, you will be able to maintain a personalised lifetime allowance of the value of your pension savings as at 5 April 2014 up to £1.5m."
He said it would be good news, however, if the triple-lock guarantee – which says the basic state pension will annually rise by inflation, average earnings or 2.5 per cent – beyond this Parliament, is confirmed.
He added auto-enrolment and the simplified flat-rate state pension policies still need time to bed in.
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