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<p>The Government is committed to public service pensions which are fair to workers
and fair to other taxpayers. Public service workers are entitled to defined benefit
pension schemes, which are among the best schemes available. Since 2010, the Government
has made reforms to limit pensions tax relief for those on the highest incomes that
save over £6 billion per year, and are necessary to deliver a fair system and protect
the public finances.</p><p> </p><p>The pension tax rules apply equally across all
registered public and private sector defined benefit schemes. In April 2016, the lifetime
allowance (LTA) was reduced to £1,000,000. However, from April 2018 it has increased
in line with CPI. This means for 2019-20 the LTA increased to £1,055,000. This allows
savers to continue to make significant amounts of pension savings tax-free, while
ensuring incentives to save are targeted across society.</p><p> </p><p>The LTA affects
only the wealthiest pension savers. Around 95 per cent of individuals currently approaching
retirement have a pension pot worth less than the LTA, while the median pension pot
for individuals approaching retirement is around £170,000.</p><p> </p><p>The Government
does keep all aspects of the tax system under review through the annual Budget process,
in the context of the wider public finances.</p>
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