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Pension warning: Lockdown has forced ‘all-or-nothing’ retirement plans – guidance issued

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“While the figures show how quickly our plans can change, they underpin how important it is to make decisions about your retirement early on so that you have enough time to prepare. “Stashing cash in your pension pot when you’re in your 30s or 40s will help ensure you do have choices about when you can retire and just how much work you want to do into your 60s and 70s.”

These issues could be made worse by oncoming pension tax changes.

Analysis from Just Group, the retirment specialist, detailed a freeze in the Money Purchase Annual Allowance (MPAA) along with changing tax thresholds is set to increase the number of basic rate taxpayers aged 55+ who have taken a taxable payment from a defined contribution pension facing a squeeze on tax relief on their future pension contributions.

It explained: “The freeze in the MPAA at £4,000 combined with new tax thresholds for 2020-21 shows how more employees, even those contributing the minimum 8 percent of salary to a workplace pension, could start to feel the squeeze due to pension contributions that exceed the allowance.

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“In 2020-21, the marginal rate of income tax was 20 percent on earnings up to £50,000 and someone earning that amount making an 8 percent pension input would be within the £4,000 MPAA limit.

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