Pensions 'should be maximised before the budget'

People saving for their retirement have been advised to maximise their contributions by investment platform Skandia. It was specified this should be done prior to the next budget announcement from chancellor of the exchequer George Osborne on March 21st. This action is being recommended amid speculation the annual pension allowance is set to be reduced. High-earning individuals eligible to pay the top rate of tax are expected to be the most effected by this development. Under the current rules, someone could use all their allowances to make a single contribution of £250,000 in one go. This is provided the payment does not exceed 100 per cent of total earnings and the annual allowance stands at £50,000. However, if this cap is reduced by £10,000, a taxpayer who has to make 50 per cent contributions will miss out on £25,000 in tax relief. If individuals in this position choose to wait until budget day to take action, it may be the case that they will no longer be able to benefit from the current maximum rate. Further difficulties are likely to be encountered later in the year, as the maximum lifetime allowance is to be cut from £1.8 million to £1.5 million on April 6th. Those who are in a position to increase the size of their savings over the current maximum are strongly advised to do so before it is too late. Pensions expert for Skandia Adrian Walker asserted the budget announcement could come with bad news for savers. "The government seem determined to find a way to increase the personal allowance to £10,000 and reducing the pension annual allowance will mainly affect those that are more affluent," he remarked. "Maximising all available allowances is certainly something everyone should do, especially those who pay tax at 40 and 50 per cent," Mr Walker suggested. Ashall Glover Financial Services, pension transfer specialists Posted by Charles Powell