The UK government is planning to increase the amount of money that workers can save in their pension funds without having to pay extra taxes. Currently, this amount is £1.07 million over a person’s lifetime, but it is expected to increase to £1.8 million. This change is meant to prevent people, especially doctors, from reducing their working hours or retiring early to avoid taxes.
However, some people think that this change will only help a small number of workers. The government is also planning other measures to increase the workforce, including providing upfront funding for childcare to parents on universal credit and raising the cap on support for universal credit claimants. They are also considering fitness-to-work tests for people with medical conditions and increasing the amount that people over 55 can put into their pensions each year.
The consultancy LCP estimates that only a small percentage of the workforce will benefit from increased pension tax allowances. The lifetime allowance is the total amount of money that someone can save in their workplace pension before facing further taxes. The government’s plans to raise this allowance will mostly benefit those who have worked in the public sector for many years. Some doctors and consultants have retired early or reduced their hours because they were in danger of breaching the tax-free pensions lifetime allowance.
The government is hoping to encourage people to work longer to help boost the UK’s economic growth. However, not everyone believes that increasing pension allowances is the best way to achieve this. Some experts argue that high earners with large pension funds already receive too many tax benefits.
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