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Pension savers were given a boost by two key announcements made by the Chancellor, during his Spring Budget.
The lifetime allowance of £1.07 million that can be saved into a pension has been scrapped with no upward limit now existing on what can be saved.
The lifetime allowance relates to the total amount of money that can be built up in a workplace defined benefit pension scheme and savings in a defined contribution pension before incurring further tax charges. The State Pension is not included in this calculation.
This increase in the annual allowance is particularly helpful for those with irregular earnings who rely on making larger pension contributions later in their careers.
Some doctors and consultants have reduced their hours or retired early from the NHS because they were in danger of breaching the tax-free pensions lifetime allowance. They calculated that continuing to work was counterproductive for their finances.
The Chancellor also announced that the annual tax-free pension allowance will be increased from £40,000 to £60,000, allowing pension savers to place an additional £20,000 per year into their fund.
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