The number of people paying £3,600 into the Hargreaves Lansdown Self Invested Personal Pension has increased six fold over the last seven tax years.

Launched in April 2001 to coincide with the introduction of Stakeholder Pensions by the then Labour government, the universal allowance allows anyone under the age of 75, irrespective of their earnings, to pay at least £3,600 into a pension.

Almost a third of the contributions are made early in the tax year, Hargreaves Lansdown said. Its senior pensions analyst Nathan Long noted that this is due to a combination of “savvy savers” without earnings looking to bank their tax efficient allowance early and workers with variable income paying in £3,600 now, with more to follow when they become more certain of their earnings later in the year.

“This is a trend set to continue. The transition from work to retirement is becoming more and more flexible, and there has been a steep rise in the numbers of self-employed and part-time workers who have more variable earnings. In addition, increasingly we see families choosing to plan their finances together, sharing their retirement planning and pension contributions. Pension contributions for children and grandchildren have the advantage of an extremely long time horizon over which to invest.

Given this allowance has gone backwards in real terms since 2001, never once being uprated, the government should bring this back into line to help those saving for retirement with increasingly disparate working patterns,” he said.

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