High earners have "piled back into pensions" to take advantage of more generous tax allowances, claims Hargreaves Lansdown.
Data from the provider showed people saved 18 per cent more in their Sipps with the company this financial year compared to the year before.
It also saw a 53 per cent increase in those contributing more than £60,000, this follows the annual allowance being increased from £40,000 in April 2023.
Head of pensions at Hargreaves Lansdown, Jack Williams, said: “Higher earners have piled back into pensions as they take advantage of the new higher allowances to boost their Sippss and maximise their tax relief.
“The number of our clients contributing more than £40,000 has tripled, and the number using carry forward to invest more than £60,000 has jumped by 50 per cent. It’s clear the rule changes have breathed fresh life into pension planning.”
Williams added high earners could benefit from using pensions contributions across their family.
Some £2,800 can be added to a Sipp each year for a non-earner, including a spouse that does not work or children, and the government will automatically pay £720 as tax relief.
In 2023’s Budget, the government increased the money purchase annual allowance from £4,000 to £10,000 a year.
Williams said: “There are strong signs this measure is working with the number of people contributing exactly £10,000 to their Sipp so far this tax year over 50 per cent higher than those who contributed exactly £4,000 in the same period last year.”
tara.o'connor@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
