MIDDLE-CLASS workers are set to receive a pensions boost in next week’s Budget as the lifetime allowance cap is raised.
Chancellor Jeremy Hunt is expected to lift the £1million allowance on tax-free pension savings in an effort to keep Brits in the office.
ReutersJeremy Hunt is expected to announce a shake-up of the pensions lifetime allowance cap at next week’s budget[/caption]
The £40,000 lid on annual tax-free pension contributions is also set for a boost.
The move is specifically targeted at doctors who leave the NHS early to avoid being trapped by taxes on their savings.
But the boost will apply to everyone.
The lifetime cap was slashed from £1.8m in 2011 to £1m today.
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In 2020 the government announced it would be frozen until 2026.
Next week that’s expected to be reversed.
The Treasury is concerned the cap is dragging middle earning professionals away from work rather than hitting its target of the ultra-rich.
When the freeze was first announced the British Medical Association warned it would “push doctors out of the NHS”.
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In January Mr Hunt hinted at changes to pensions as he vowed to crackdown on early retirement.
He said: “To those who retired early after the pandemic or haven’t found the right role after furlough, Britain needs you.
“We will look at the conditions necessary to make work worth your while.”
The exact amount caps will be lifted by will be confirmed on Wednesday, when Mr Hunt reveals the budget in the Commons.
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Alongside pensions, the Chancellor is poised to confirm the Energy Price Guarantee will be extended for three months.
That means instead of soaring to £3,000, average energy bills will be capped at £2,500.
In July when the guarantee runs out gas and electricity costs are predicted to fall to £2,000 per year.