State pension contributions may help Britons avoid Sunak’s 55% tax charge | Personal Finance | Finance
The state pension and pension savings often work hand in hand to support people in retirement. However, pension savings could be at risk of a staggering 55 percent tax due to a recent allowance freeze.
The Pension Lifetime Allowance is the maximum a person can hold in workplace and personal pensions while still receiving pension benefits.
Individuals may not think their savings will exceed the current £1,073,100 limit, but they could find themselves propelled over the barrier in the coming years.
The Chancellor’s five-year freeze to Lifetime Allowance means many could find themselves subject to the tax simply by virtue of inflation.
However, according to one expert, state pension contributions could be the solution to avoiding the charge.
READ MORE: State pension payments confirmed to rise this year
Voluntary contributions also do not always increase an individual’s state pension.
As a result, people are also encouraged to contact the Future Pension Centre to find out if they will benefit.
The Government also states people may wish to get financial advice before they decide to make voluntary contributions.
Further information is also available via the Government’s website.
