Shaw also agrees the increased LTA will enhance the longevity of pension contributions without the concern of a potential LTA charge.
But she argues that with the increased AA, although this will reduce the risk of an AA charge and therefore make further pension contributions more feasible, it could have the opposite effect than desired in some circumstances.
She explains: “It may enable quicker saving of pension pots and earlier retirement rather than keeping experienced individuals in work. The recent changes generally have a greater impact on higher earners and those with significant pensions in place rather than the majority of the employed population.”
For other high earners who would otherwise have retired, David Hearne, chartered financial planner at Financial Planning Partners, does not think it will keep many in work.
Hearne adds: “For those who did exceed the LTA, they often continued working and instead received additional pay in lieu of pension contributions.
“In some cases, this could actually help some higher earners retire early, particularly if they had thought they would face a LTA tax charge on their pension, but can now draw more income from their pension instead.”
Ima Jackson-Obot is deputy features editor of FTAdviser
