Millions of Brits could benefit from the abolition the lifetime pension allowance, according to national IFA firm Continuum.
The lifetime pension allowance was the maximum value in either a defined benefit or defined contribution scheme before an individual faces further tax charges. Any amount over this allowance was previously liable to tax.
The lifetime allowance had been set to remain at £1.07m until 2025-26.
The move is likely to prove popular with higher earning professionals, some of whom have chosen to retire early or reduced their hours due to coming close to the lifetime pension allowance. Campaigners have argued that continuing to work was counterproductive to the finances of many professionals due to the level of the lifetime allowance.
Martin Brown, Managing Partner at Continuum, said: “The abolition the lifetime pension allowance is the latest in a series of moves from Chancellor Jeremy Hunt aimed at persuading people to work for longer to boost the country’s economic growth.
“With many industries facing labour shortages, encouraging older people to keep working could provide a boost to GDP, though over 50s need to carefully consider their options before deciding to make changes to their retirement plans.
“It is important to plan how your finances will work and remember that there are many options available which will all have different tax implications. Avoiding paying too much tax, especially if you make withdrawals as well as contributions to your pension pot, demands real expertise.
“A good independent financial adviser can ensure that you make the most of your money and help you choose the option that works best for both you and your finances.”
Continuum also said that the abolition of the lifetime allowance could see more people turn to independent financial advisers.
Martin Brown added: “Many UK pension savers who were previously close to the lifetime allowance may feel that now could be a good time to consider saving more into a pension. Those with defined contribution pension schemes who have saved industriously over their career will be wanting to look again at their financial planning in order to inflation-proof their lifestyle in retirement. At Continuum we are all ready to deal with the increased demand on top of the normal flurry of activity to meet the annual April tax deadline.”
The Chancellor also increased the £40,000 annual allowance on tax efficient contributions into pensions to £60,000.
The annual allowance is the amount an individual can save towards their pension each year, before facing a tax charge. Campaigners have also been arguing that the cap had been set too low.
Martin Brown, Managing Partner at Continuum, said: “The spending power of pensioners has been hit hard by soaring inflation with the prices of food and utility bills continuing to rise.
“The measures in today’s budget could make it more attractive for those approaching retirement to remain in the workforce, but working longer is not the only option.
“A good financial adviser can help put a long-term plan in place to manage inflation and maintain desired lifestyle without having to work longer.”
Editors Notes – About Continuum
Continuum, headquartered in Plymouth, was established in 2014 by founding partner, Martin Brown, as a National IFA brand to offer a modern, new financial advice experience.
The business focuses on creating a three-way partnership between Continuum, the adviser and the client, in an environment where each party can only succeed and grow if the other parties also succeed and grow.
By educating customers through an award-winning financial education programme and offering our clients a loyalty programme, Continuum develops long-term relationships strongly endorsed though market leading Net Promoter Scores – most recent customer survey in November 2022 delivered a score of +98.5.
An in-house discretionary model portfolio service, My Continuum Wealth, was initiated in July 2021 to offer an exclusive MPS (Model Portfolio Service) to Continuum advisers.
Continuum now holds assets under influence in excess of £1.6 billion.
In December 2020 Continuum was awarded ESG kitemark (ESGmark) accreditation in recognition of its business approach of Environmental, Social Responsibility and Governance matters.
Continuum is a trading name of Continuum (Financial Services) LLP which is authorised and regulated by the Financial Conduct Authority. Continuum (Financial Services) LLP is a Limited Liability Partnership
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