The massive jump in the number of people being hit with lifetime allowance charges shows the government’s ongoing raid of pensions.
This is the bold assessment of the CEO of one of the world’s largest independent financial advisory organisations following the release of official pension tax charges from the UK tax authority, HMRC.
More than 37,000 savers paid over £173m in last tax year – double the amount from the year before.
Nigel Green, founder and chief executive of deVere Group, affirms: “The significant rise in the number of people being hit with allowance charges – more than double in a year – underscores how successive British governments consider people’s retirement savings as easy, low-hanging fruit to be raided.
“The growing number of people being dragged into this net is a slap in the face for those who have worked hard and saved hard, prudently putting money aside all their lives, in order to be able to enjoy their desired retirement. It is nothing short of a cap on aspiration.
“Governments – more than ever – need to be encouraging people to save. This is especially true as the burgeoning pensions crisis and the looming care crisis, the fact that governments are increasingly less likely to be able to support citizens moving forward, and as people are living longer, mean savings have to go further.
“We need to urgently revitalise, promote and nurture a savings culture as a matter of priority.
“Successive governments’ constant shifting of the goalposts is going to have the opposite effect to this desired outcome.”
He continues: “It could be reasonably argued that the systematic reductions to the lifetime allowance are precursors to a fully-fledged wealth tax – as that is what these limitations essentially represent.”
The deVere CEO concludes: “A year ago LTA only adversely impacted a small number of ultra-wealthy people. This is no longer the case. Due to government tinkering, an increasingly large number of people are now hit by these charges.
“To mitigate the ever-looming impact of pension tax charges, people should explore all the options available to them.”