Responding to the announcement, Carl Emmerson Deputy Director at the Institute for Fiscal Studies said:
"The lifetime allowance and, in particular, the annual allowance are both badly designed and in need of reform. The annual allowance hits those who want to make large but infrequent pension contributions and can provide terrible incentives for high earners that have inflexible defined benefit arrangements. Both have been cut dramatically since 2010, raising the exchequer an estimated £8 billion a year in additional revenue.
Increasing them will reduce the damage they do, but even better would be a more thorough reform of how pensions are taxed. High earners with big pension pots do benefit from inappropriately generous tax treatment of pensions, but there are much better ways of restricting this than these crude limits."
Authors
Carl Emmerson
Carl, a Deputy Director, is an editor of the IFS Green Budget, is expert on the UK pension system and sits on the Social Security Advisory Committee.
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