Jeremy Hunt 'prepares to boost tax free allowance on pensions by more than £500,000' in bid to stop early retirement

14 March 2023, 08:14

Chancellor Jeremy Hunt is understood to be preparing to boost tax free allowance on pensions by more than £500,000 in a bid to get older professionals back to work.

Mr Hunt is said to be considering allowing workers to put more money into their pension pot before being taxed as part of his Budget package, which will be unveiled on Wednesday.

He is keen to bolster Britain's workforce as he looks to deliver on PM Rishi Sunak's pledge of growing the UK's stalling economy.

The lifetime pension allowance (LTA) currently stands at £1.07 million, with savers incurring tax after that personal pension pot threshold has been exceeded.

The Times said the Chancellor could hike it to £1.8 million, while the Telegraph said it could be set to more than £1.5 million.

It is also understood that the Budget could see the annual allowance rate for pensions increased, with Mr Hunt having asked advisers to calculate how much a change would cost the exchequer.

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It comes after Mr Hunt vowed to consider fiscal measures that would help the over-50s who had taken early retirement during or after the pandemic to return to work during a speech earlier this year.

Speaking in January, he said employment levels were lower than they were before the coronavirus pandemic by around 300,000 people.

"So, to those who retired early after the pandemic, or haven't found the right role after furlough, I say: Britain needs you," Mr Hunt said.

"And we will look at the conditions necessary to make work worth your while."

The pension lifetime allowance was first applied in 2006, when it was set at £1.5 million. It rose to a peak of £1.8 million by 2012 before gradually being cut.

It was due to stay at £1.07 million until 2026 but Mr Hunt could choose to bring a change forward.

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The Treasury said it does not comment on Budget speculation.

Meanwhile, the Chancellor has confirmed that £63 million will be made available in his Budget to help public swimming pools stay open in the face of high energy bills.

More than £20 million of the one-year fund will be made available in grants to leisure centres with pools that are dealing with immediate cost pressures, while £40 million is earmarked for investment in decarbonisation and long-term energy efficiency measures.

The Treasury said leisure centres with swimming pools are responsible for up to 40% of local authority carbon footprints due to the need for bathing waters to be heated to safe temperatures.

Mr Hunt said: "Soaring bills are hitting us all hard, and community pools have been thrown in the deep end. "I know they are loved by millions of people. This vital lifeline will keep them afloat."