Pension: Nadhim Zahawi urged to unfreeze pension lifetime allowance | Personal Finance | Finance


Mr Zahawi was appointed as the Chancellor yesterday evening, following a shock resignation from outgoing chancellor Rishi Sunak. The former education secretary is now tasked with leading Britons through a cost of living crisis and a tough economy.

However, he has also been urged to consider policies which could impact those saving for their pension.

Steven Cameron, Pensions Director at Aegon, today congratulated Mr. Zahawi on his new appointment to the second highest job in Cabinet.

However, he has also analysed what steps the new Chancellor may be able to take in terms of policy.

Mr Camer said: “While people think pensions policy is set exclusively by the Department for Work andensions, the Treasury has great influence, particularly around how the tax system supports pensions.

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The Lifetime Allowance is a limit on how much a person can save into a pension throughout their lifetime without being subject to a hefty tax charge.

It has been set and frozen at £1,073,100 until 2026, in a move which many debated the fairness.

This is because as inflation soars and incomes increase, many will find themselves inadvertently propelled over the limit, without necessarily taking any action.

Recent figures from Canada Life predict Lifetime Allowance duties will triple from £500million in the last tax year to nearly £1.5billion by 2025/26 – meaning almost £6billion will be lost over the next five years.

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Mr Cameron added: “With inflation skyrocketing, more and more people are being dragged into facing this tax charge.

“Now may be the time to unfreeze this measure.

“While Nadhim Zahawi will have many other pressing priorities, we hope his appointment creates an opportunity to make sure pensions tax policy is truly fit for the current environment.”

According to TheyWorkForYou, Mr Zahawi has never rebelled against the Tory Party in the current Parliament, making him a loyal choice for the Prime Minister.

Consistently, the new chancellor has voted for encouraging occupational pensions, and almost always voted for reducing capital gains tax, the website found.

However, Mr Zahawi has this morning indicated his dedication to cutting taxes.

He told Sky News: “The important thing is to get inflation under control, and be fiscally responsible.

“The team in Government is a team that will deliver a tax cut of £330 for 30 million people today as we move the National Insurance threshold up.

“We’re delivering the first tax cut in a decade today. I’m determined to do more.”

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