The lifetime allowance for pension savings will increase in line with CPI next April, the Budget has detailed.

While the Chancellor of the Exchequer Philip Hammond’s first Autumn Budget, delivered today, 22 November 2017, made little reference to pensions, previously planned increases regarding the lifetime allowance, and continued rate of annual allowance tax relief have been confirmed.

The lifetime allowance will rise in line with CPI (rounded to the nearest £100) to £1,030,000 for 2018-19. This will rise in April.

As outlined in the Budget Costings, pensions tax relief for the annual allowance will remain fixed at £40,000 and the pensions tax relief for the tapered annual allowance will remain for individuals with income over £150,000, including pension contributions.

Furthermore, pensions tax relief for the Money Purchase Annual Allowance also remains fixed at £4,000.

Prudential retirement expert Les Cameron said: “It’s good to see the lifetime allowance increase is going ahead as planned. This will see a saving of up to £16,500 for those with large funds.”

Aegon head of pensions Kate Smith shared a similar view: “Fortunately there was no U-turn in the Lifetime Allowance increase which has been confirmed to increase to £1,030,000 from next April. Following a series of reductions, this is good news for savers, even if on the surface the increase isn’t large. A small increase is welcome for those nearing the limit, but this is a complex area and people seek financial advice to avoid paying unnecessary tax.”

ABI director general Huw Evans said: “No further tweaking of pension tax relief provides some welcome stability for pension savers after the salami slicing of recent years. There are still strong arguments for a fundamental overhaul of pension tax relief to make it fairer and more sustainable but it is the right decision by the Chancellor not to be tempted by piecemeal changes.”

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