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Daily Mirror
Daily Mirror
Business
Levi Winchester

Budget 2023: Millions set for pensions boost to get over-50s back into work

Workers will be allowed to put more money into their pension pots as part of plans expected to be announced in the Budget tomorrow.

The move would see the pensions lifetime allowance increased for the first time since 2020.

The lifetime allowance is a limit on how much you can save into pension schemes without having to pay extra tax, with the figure currently set at £1.07million.

The BBC and The Times suggest Jeremy Hunt will increase this to £1.8million, while The Daily Telegraph today reports that it could be set to more than £1.5million.

It is also understood the Budget could see the pensions annual allowance rate - the most you can save each tax year before you have to pay tax - increased.

The Telegraph and The Times said the amount each person can save each year before incurring tax was likely to rise from £40,000 to £60,000.

Both expected changes are being seen as ways to keep people working longer and to encourage over-50s who had taken early retirement back into work.

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In his Bloomberg speech earlier this year, Mr Hunt said employment levels were lower than they were before the Coronavirus pandemic by around 300,000 people.

Mr Hunt said: "So, to those who retired early after the pandemic, or haven't found the right role after furlough, I say: Britain needs you.

"And we will look at the conditions necessary to make work worth your while."

The Treasury has not commented on the reports about the potential pension changes.

The lifetime allowance applies to defined benefit and defined contribution pension schemes.

The rate of tax you pay on pension savings above the threshold is 55% if you get it as a lump sum, or 25% if you get it any other way.

The state pension is not included when calculating your lifetime allowance.

The British Medical Association (BMA) has called the current LTA rate "punitive" and argued it has encouraged doctors to leave the profession.

On its website, the BMA said: "High contribution rates, significant pay erosion, and a punitive pension taxation system have resulted not only in an exceedingly high cost of scheme membership for senior doctors, but also in them receiving reduced pension benefits.

"This has resulted in large numbers of doctors retiring early or reducing their hours."

In January, former pensions minister Baroness Altmann lobbied ministers to change "illogical" pension rules to help ease a workforce crisis in the NHS.

During a House of Lords debate, the Conservative peer said "even middle earners" were finding their "supposedly tax-free pension contributions" were "causing them to receive huge tax demands that can even exceed the extra earnings".

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