UK Government To Raid Your Pensions To Pay the Debt Incurred By The Covid-19 Pandemic!

Three new reforms for the way in which pension contributions are taxed are being considered amidst the pressure on public finances that have been induced by the large debt caused by the Covid-19 pandemic.

One idea being looked at would see the pensions lifetime allowance lowered from around ￡1,073,000 to ￡800,000 or ￡900,000. Pensions savings above that amount incur a 55 per cent tax charge if they are withdrawn as a cash lump sum or 25 per cent if they are withdrawn as an income.

For more information on your lifetime allowances see the slideshow below:

A second idea would be a single rate of tax relief for pension contributions. Higher-rate taxpayers who put money towards their pension each year tax-free currently get a tax relief rate of 40 per cent, but lower earners who do the same get 20 per cent.

While a third idea is a new taxation on employer contributions.

According to an article published by www.retirementlivingstandards.org.uk, 77% do not know how much they need in retirement. Whilst 80% are walking into the participation minimum income. A mass majority are going to be unable to afford a car, a holiday, or gift money to kids and grandkids in their retirement.

It is imperative that we plan for our retirement early and seek the help of a financial advisor to enlighten us on how to reach and exceed our financial goals.

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