Drewberry Wealth Management has created a new online calculator for savers affected by Budget changes to the annual pension allowance, which its director warned could impact rates of long-term saving.
Last month, the chancellor decreed that from April 2016 the £40,000 annual pension allowance will reduce by £1 for every £2 of income earned over £150,000 per annum, down to a minimum of £10,000 for those earning over £210,000 per annum.
Tom Conner, director at the Intrinsic appointed representative adviser firm, said that while recent changes have given more choice about what people can do with their money at retirement, “the government needs to be very careful about reducing the tax efficient benefits of pensions at a time when people are generally not saving enough for retirement”.
He warned that income tax relief on pension contributions is a major influencer of long-term retirement saving.
“For people affected by the reduction in the pension allowance, there are other options for them, including tax-efficient investments like venture capital trusts and the enterprise investment scheme, but these are often much higher risk, so seeking financial advice can be crucial.”
The calculator can be used by advisers who want a simple way to work out their client’s allowance - the annual amount that consumers can put into a pension and receive income tax relief.
It also has an advanced section to help can work out how much unused allowance from previous years can be carried forward.
peter.walker@ft.com
