One in three pension savers are worried about the government’s constant tinkering with the pension rules, new research from Hargreaves Lansdown has shown.
In a survey of 250 clients, 30% of people said changes to the rules made them nervous, while a quarter of people cited investment volatility as their biggest concern.
Potential lifetime allowance breaches were a concern for 12% of people, while a further 12% worried they weren’t contributing enough. Concerns about contribution levels were higher among the 30-54 age group, while constant tinkering with rules was the main concern of older age groups, the firm said.
The pension lifetime allowance has been significantly reduced over the past decade. Having risen to a peak of £1.8 million in 2012, the government has moved to lower the limit, reaching a low of £1 million in 2016/17, before rising to its current level of £1,073,100. However, the Chancellor announced in his March Budget that the allowance would be frozen at its current level until April 2026.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “Tinkering with rules has been a hallmark of the pension industry in recent years with lifetime and annual allowance thresholds being slashed and then frozen. The introduction of tapered and money purchase annual allowances have also thrown a spanner in the works for those on high salaries or who have accessed a pension, as they prevent them from making significant further contributions. It’s no surprise that this constant tinkering has got people worried.
“Pensions are a long-term game and many of these changes have been introduced at short notice and in a piecemeal fashion rather than as part of an overarching strategy. It’s understandable that people are wary of what might be around the corner and this affects their retirement planning. Any further changes to pension tax relief needs to be done as part of a wholesale considered review rather than tinkering around the edges and the unintended consequences it brings.”
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