The government also announced the lifetime allowance on pension saving would fall from £1.8m to £1.5m.
The government said the move, which comes into force next April, will raise £4bn a year and will affect 100,000 pension savers, 80% of whom have incomes exceeding £100,000 a year,
Tax experts have welcomed the announcement following a period of uncertainty after June’s emergency budget, in which it was announced the limit was under review.
George Bull, head of tax at Baker Tilly, said: “After a period of considerable uncertainty, this clarification will provide peace of mind for many people trying to make adequate provision for their retirement income in a time of economic instability.
Once the new limit is in force, we urge the Government to refrain from future tinkering in order that people can have confidence about their own pension planning.”
