The Chancellor’s plans to raise the lifetime allowance on pensions will not be “massively effective” in tempting over-50s back to work, a leading economist has said
The Chancellor’s plans to raise the lifetime allowance on pensions will not be “massively effective” in tempting over-50s back to work, the director of the Institute for Fiscal Studies has said.Paul Johnson said that the tax-free limit on pensions savings was a “pretty small part of the picture”Chancellor Jeremy Hunt is expected to announce in his Budget on Wednesday that the lifetime allowance – the maximum amount that can be saved in a pension before it is taxed – will be raised from £1.
There are also reports that Mr Hunt is considering increasing the annual tax-free limit on pension contributions from £40,000 to £60,000. The move is aimed at tempting more over-50s who have retired back into the workforce, but Mr Johnson said he “can’t imagine [these changes] will be massively effective at reversing the trend”.
“To the extent that it’s about people voluntarily retiring, because they can retire early, it’s hard to know how to undo that,” he told“It has been suggested that the lifetime allowance will be increased, but I don’t think there’s any evidence that this is a big issue other than for a small number of highly-paid doctors and a few other people in the public sector.”
He said the challenge was understanding why many over-50s were choosing to retire early, and whether this trend will continue.
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Raising lifetime allowance won’t get people back into work, says leading economistThe Chancellor’s plans to raise the lifetime allowance on pensions will not be “massively effective” in tempting over-50s back to work, the director of the IFS (PJTheEconomist) has said 🔴 Exclusive from jessiehewitson and eleanormia
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Raising lifetime pension allowance won’t get people back into work, says leading economist🔴 Jeremy Hunt's plans to raise the lifetime allowance on pensions will not be 'massively effective' in tempting over-50s back to work, the director of the Institute for Fiscal Studies has said
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