The lifetime allowance limit on pensions is being abolished in a bid to help get older people back into work, the Chancellor has announced as part of his spring budget. Jeremy Hunt said no one should be "pushed out of the workforce for tax reasons".
He told the Commons: “I have listened to the concerns of many senior NHS clinicians who say unpredictable pension tax charges are making them leave the NHS just when they are needed most. The NHS is our biggest employer, and we will shortly publish the long-term workforce plan I promised in the Autumn Statement. But ahead of that I do not want any doctor to retire early because of the way pension taxes work.”
He added: “As Chancellor I have realised the issue goes wider than doctors. No one should be pushed out of the workforce for tax reasons. So today I will increase the pensions annual tax-free allowance by 50% from £40,000 to £60,000. Some have also asked me to increase the Lifetime Allowance from its £1 million limit. But I have decided not to do that.
“Instead I will go further and abolish the Lifetime Allowance altogether.”
The lifetime allowance is the limit on how much you can build up in pension benefits over your lifetime while still enjoying the full tax benefits.
Mr Hunt said the changes would “stop over 80% of NHS doctors from receiving a tax charge” and incentivise “our most experienced and productive workers to stay in work for longer”.
It was the third of three steps set out by Mr Hunt to encourage older people to go back to work, with plans for a new kind of apprenticeship for people over the age of 50 who want to get a job. He said: "We will increase the number of people who get the best possible financial, health and career guidance ahead of retirement by enhancing the DWP’s excellent ‘Mid-life MOTs’ Strategy.
“Second, with the Education Secretary, we will introduce a new kind of apprenticeship targeted at the over 50s who want to return to work. They will be called ‘Returnerships’, and operate alongside skills boot camps and sector-based work academies.
“They will bring together our existing skills programmes to make them more appealing for older workers, focusing on flexibility and previous experience to reduce training length.”
