The expected increase in Wednesday's Budget on the amount that individuals can accumulate in their pension savings before paying tax is a "game-changer," according to the CEO and founder of one of the world's largest independent financial advisory organisations.
The assessment from Nigel Green of deVere Group comes as Chancellor Jeremy Hunt prepares to give his first full Budget tomorrow.
The lifetime allowance (LTA) is the maximum people can contribute to a pension – at present £1.07m – before facing tax charges. The LTA was originally set at £1.5m when it was introduced in 2006. It steadily increased to £1.8m in 2010 but fell to £1m in 2016.
The deVere CEO says: "We welcome reports that Chancellor Jeremy Hunt has decided to raise the lifetime allowance (LTA) on pension savings to £1.8m in tomorrow's Budget.
"Following years of successive cuts and holding firm, this is a game-changer.
"It is likely to spur millions of people into reviewing their pension saving plans as they seek to build up more funds for their retirement.
"This is a win-win scenario for the UK economy and individuals.
"This move serves as an incentive to save as much as possible for retirement and encourages older people to return to the workforce, thereby boosting Britain's chances of long-term economic prosperity.
"It also highlights that retirement finances are increasingly a personal responsibility. It's becoming clearer that the government won't be able to support and provide for its citizens as it has done for generations before due to an ageing population and shrinking workforce; weaker economic growth; rising living, health and care costs; less generous company pensions if they exist at all; and the fact we're living longer, meaning that accumulated funds need to go further. As such, moves to encourage saving must be championed."
There is also hope that Mr Hunt in the Budget tomorrow will announce "a much-needed wider review of the pension tax regime", which has become "increasingly and unnecessarily" complex in recent years.
"We expect a surge in enquiries from tomorrow as people sensibly review their retirement planning to take advantage of the LTA changes," concludes Nigel Green.