Annual allowance cut ‘will punish’ catch-up pension savers

A cut to the annual allowance in the Autumn Statement would hit middle-class savers who increase contributions to their pension pot later in life.

Yet this is what the Financial Times has reported as a distinct possibility as we understand George Osborne is considering raiding higher-rate tax relief for the rich by lowering the threshold of the tax-free annual allowance from £50,000 to £40,000 or £30,000.

This is rumoured to have been instigated by  the Liberal Democrats, who want to cut to higher-rate tax relief and could mean an extra £600m to £1.8bn each year for the Treasury.

Our concern is that this could penalise  the middle-class and accelerate the closures of defined benefit schemes.

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