The sum that Brits can save into their pension without incurring additional tax will rise to around £1.073m ($22.8m, €20.7m) from April 2020.
It could go as high as £1.075m, however, given the UK government’s predilection for rounded figures.
The CPI rate of 1.7% was unchanged from August, which experienced a shock drop from 2.1% in July.
Frozen allowance
Although welcoming the increase, industry commentators were quick to point out flaws in the UK’s overly complication pension allowance system.
Helen Morrissey, pension specialist at Royal London, flagged the perennially frozen annual allowance of £40,000.
“This exposes the real lack of joined up thinking when it comes to this ridiculously complex web of tax allowances and highlights the need for urgent reform.”
Wrong gauge
Steve Cameron, pensions director at Aegon, added: “Although any increase is welcome, these increases are in line with price, not earnings, inflation.
“With wage growth remaining much higher than inflation, this means in earnings terms the lifetime allowance is becoming less and less generous, leaving more individuals, and not just particularly high earners, at serious risk of breaching the limit.
“Recent figures show that the total value of lifetime allowance charges paid by schemes in 2017/18 was £185m, a 28.5% increase from 2016/17.”
