The first round of the pension simplification review has now been launched, with another set for next year. However, following mass criticism from the industry and MP's, the Chancellor is now reviewing the lifetime limit.
Originally, the lifetime limit for pensions was to be £1.4m, which seems completely huge to most of us! However, the criticism has sparked a review by the National Audit Office to see just how many people will be disadvantaged.
The problem with the limit was that a charge of 33% would be made for pensions over and above the limit. This is thought to be reducing now to around 25%.
Our View
There are unlikely to be any results from this one until the New Year or even the next budget in April. We believe that the lifetime limit and penalties for going over the limit are completely against the Government's plan to encourage saving in the UK.
Whilst the limit is huge and most of the general public will never reach it, why should others that want to pay in as much as they can be penalised?
The Chancellor seems to have chucked his dummy out on this one, threatening to leave the UK with 8 different pension tax regimes if the lifetime limit can't be sorted. Listen to the industry Gordon, we say!