Yahoo Finance Savers rush to stuff pensions as Budget cuts loom
Fears Philip Hammond is planning a tax raid on pensions is fuelling a last-minute dash to top up savings.
Cash flowing into pension accounts run by Zurich, the insurer, doubled in September, compared to the average. One-off contributions soared 161pc as savers stashed away larger amounts than normal.
This newspaper revealed that the cash-strapped Chancellor is eyeing a cut to the generous tax perks afforded to pensions in next week's Budget. You can save up to £40,000 a year into a pension and benefit from "tax relief".
The incentive costs the Treasury billions of pounds a year and it is thought Mr Hammond may scale back the annual limit to fund his spending pledges, including £20bn for the NHS.
Under rules known as "carry forward" you can use the previous three years' allowances in any one tax year. That means you could save as much as £120,000 in 2018-19.
Zurich's Alistair Wilson said many savers are paying in more than £40,000 "while they still can".
Mr Wilson added that rather then reducing the cost of tax relief, "the Government's continued tinkering with pensions is pushing the bill up".
He said: "Investors are clearly worried that the Government could slash the savings limit in the upcoming budget and are rushing to top-up their pots.
"The amount of money flowing into pensions doubled last month – even outstripping peaks seen ahead of tax-year end."
The insurer also warned self-employed workers would suffer the most.
Mr Wilson said: "Britain’s growing population of self-employed workers already misses out on benefits such as auto-enrolment, making it harder for them to save for retirement. Restricting the amount they can save would penalise them further.
"To soften the blow of any lower annual allowance, the Chancellor should consider increasing the number of years people can carry forward unused allowances, or introducing an age-related allowance that rises as consumers near retirement."
sam.brodbeck@telegraph.co.uk
