PIMFA
26 February 2021
Freezing the Lifetime Allowance penalises pension savers and will hamper the UK’s economic recovery
PIMFA, the trade association for wealth management, investment services and the investment and financial advice industry, is disappointed by reports that the Chancellor is considering freezing the Lifetime Allowance for pension savers in next week’s Budget.
Simon Harrington, senior policy adviser – pubic policy, at PIMFA, comments:
“We are concerned by reports that the Chancellor is considering freezing the Lifetime Allowance. Doing so penalises pension savers looking to secure their future and in the most extreme cases sees people left with no choice but to give up work. Freezing the lifetime allowance could see a number of people inadvertently exceed their allowance and, as we have seen previously with NHS workers, incur a 55% tax hit which they otherwise would not have to pay.
“One way around freezing the Lifetime Allowance, if the Chancellor goes ahead with it, may simply be for those at risk of exceeding their own allowance to make contributions to their spouse’s pension instead. This is particularlu useful if their spouse either makes much smaller, or no contributions to their own pension. This is also just one of many possible solutions those likely to exceed their pension Lifetime Allowance can explore. As a result, the Treasury may not collect as much in tax revenue as it might have initially hoped.
“Whilst we strongly believe that there should be focus on repairing public finances, we would urge any moves to not be at the expense of individual personal finances. Covid has shown how fragile the UK’s consumption driven economy can be. We need to become a more resilient and investment driven country. This cannot be achieved without the savers and investors that would be most hit by these changes.”
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Notes for Editors
About PIMFA – the Personal Investment Management & Financial Advice Association
- PIMFA is the trade association for firms that provide investment management and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
- The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
- PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families, to charities and pension funds, all the way to trusts and companies. Associate members provide professional services to the PIMFA community.
- PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
- PIMFA has made numerous recommendations to the FCA regarding the Future of Supervision and the FSCS levy – read more.
- PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
- Further information can be found at pimfa.co.uk
Contact
For further information on this release or other press matters please contact:
- Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376
- Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225
