More than half of higher rate taxpayers have restarted, increased or plan to increase pension contributions following the scrapping of the pension Lifetime Allowance (LTA), research from wealth manager Investec Wealth and Investment has shown.
The study found that 59% of higher rate taxpayers have taken a range of actions as a result of the scrapping of the LTA.
For example, those who have increased their pension payments are putting in an additional £650 ($849, €757) a month, while 16% who had stopped pension saving because they had reached or were close to the LTA will restart.
Some 23% have delayed their planned retirement, or will probably do so in order to save more into their pension, while 10% have come out of retirement as a result.
Ade Babatunde, financial planning director at Investec Wealth and Investment, said: “Scrapping the Lifetime Allowance was a surprise in this year’s Budget and it seems to have been very much welcomed by those who have built significant wealth across their pensions and by higher, and additional, rate tax payers.
“It’s worth remembering that the LTA was £1.5m when it was first introduced in 2006 and went as high as £1.8m at one stage, so the gradual reduction meant it potentially affected more and more taxpayers and had a major impact on the amount they were willing to contribute to their pensions.
“Abolishing the LTA simplifies some decisions around retirement and estate planning but also makes it more important that people seek independent advice on pensions due to the changes in tax treatment.”