Pensions experts have warned Alistair Darling that his decision to freeze up lifetime pension allowances could have a major impact on savers around the country. Darling froze lifetime pension contributions from 2010-2015 at £1.8 million. Anything above that rate will be taxed at 55 per cent.
However, some experts have termed the decision a stealth tax, and warned that thousands more people would now have to pay tax at the higher level.
Head of pensions development at Aegon Scottish Equitable, Rachel Vahey, reportedly commented: "The industry expected the lifetime allowance to continue to either rise in line with inflation or earnings, so it feels like the rug has been pulled out from underneath us. Many people who have planned their finances on this basis will have to go back to their advisers and see what this means in practice."
Senior pensions consultant at Watson Wyatt, Stephen Green, was reported as saying: "Both rich and poor will have their retirement planning affected by this freezing of the lifetime allowance. For some companies, this might mean senior employees will request benefits in the form of cash payments, rather than pension benefits, much sooner than they might have expected."
Pensions freeze will hit savers
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Pensions freeze will hit savers
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