UK Budget 2023 brings good news for older workers
Punter Southall Aspire CEO Steve Butler said the move to increase from £4,000 to £10,000 the amount you can save into a pension once you have taken out more than the 25 per cent tax-free sum is good news for older workers.
He said: “A significant number of people who left the workforce after the pandemic were 50-somethings who could access their pensions. In doing so, they slashed what they could save tax-free each year by ten times.
“Reinstating what’s clunkily known as the money purchase annual allowance to £10,000 – what it was in 2015 – gives those people who want or need to come back to work a clearer path to contribute towards an eventual retirement in a labour market that continues to transform.
“More people are working flexibly, starting new ventures or new careers even later in life and funding it from their own pocket. Pension tax needed to change to reflect this reality. I’m glad it has because this means they can continue to be self-reliant and save meaningfully while continuing to contribute to the wider economy. Isn’t that a win-win?
“The allowance was reduced to stop people recycling the tax-free limit ie using it more than once, but how many people seeking to stay economically active do so with that in mind? Very few, I would wager, and the extra tax they generate while extending their working life will, I predict, more than make up for the relatively small proportion which may be recycled.”