Savers rush to top-up pensions amid Budget tinkering fears

Savers are rushing to top-up their pensions amid fears chancellor Philip Hammond will deliver a further cut to the annual allowance in this month’s Budget, Zurich says.

Cash flowing into pensions on Zurich’s investment platform soared 98 per cent in September compared to the annual average, the firm has found.

The value of one-off pension contributions also jumped 161 per cent from the 12 month average as savers invested larger amounts.

While the provider says it could not reveal the monetary value of the extra amounts being put on the investment platform as the information is commercially sensitive, it points out savers invested double the average last month.

Zurich’s head of retail platform strategy Alistair Wilson says savers are making the most of the higher pension savings cap while they still can, and are worried the government could slash the savings limit in the Budget next Monday.

There is frequent speculation before each Budget whether the government will change tax relief with former pensions minister Ros Altmann arguing the Treasury will steer clear of radical change amid Brexit uncertainty.

Yet Wilson adds savers are rushing to top-up their pots and savers are also paying in more than the current £40,000 annual limit to take advantage of unused allowances from previous years before it is too late.

Although any reduction in the annual allowance would be targeted at wealthy savers, Wilson says self-employed workers will suffer the most.

He adds not everyone pays into a pension in the same way and self-employed workers often have to choose whether to contribute to a pension or invest in their business.

This means they may only be able to make ad hoc contributions as they go or larger payments nearing retirement, so restricting the amount they can save in any year would penalise them further.

Wilson says: “To soften the blow of any lower annual allowance, the chancellor should consider increasing the number of years people can carry forward unused allowances, or introducing an age-related allowance that rises as consumers near retirement.”

Recommended

Magnifying-Glass-And-Text-Kindle-Contract-700x450.jpg
2

Govt to examine pensions tax relief fairness

The government has said it will “examine the process for payment of pensions tax relief” in response to concerns low-paid workers in net pay schemes are losing out. Addressing the House of Lords on Monday night, parliamentary under secretary of state for pensions Baroness Buscombe said the government wants to make the most of any […]

Govt spending on pensions tax relief stabilises

The cost of pensions tax relief remains largely unchanged, according to annual estimates published by HM Revenue & Customs. The figures, published today, show the cost of pension tax relief rose slightly to £38.6bn in 2016/17 from £38.5bn in 2015/16. The new data show a contrast to 2015/16, where the cost of tax relief leaped by […]

Platform costs

Alliance Trust Savings sold to Interactive Investor

Alliance Trust Savings has been sold to fellow flat-fee platform Interactive Investor for £40m. II will also take control of parent company Alliance Trust’s office building in Dundee that houses ATS as part of the deal. ATS confirmed it was in discussions with potential new owners in July, but market watchers had tipped a deal […]

European equities

European equities H2 outlook: valuation support & record discounts

Rob Burnett, Investment Director & Head of European Equities In this video, Rob Burnett explains why, given the recent market stresses in Europe, the absolute and relative return potential is strong. Watch the video here Disclaimer: Investment risks This Fund may have a high volatility rating and past performance is not a guide to future […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com