Britons urged to use 'generous' tax relief as pension savings could be boosted by 63%
Britons made greater pension contributions as the last tax year came to and end
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Pension savers in the UK are being reminded to take advantage of "generous" tax relief which could significantly boost retirement savings before its made no longer available.
Analysis carried out by PensionBee found that Britons increased their average quarterly contributions by 63 per cent in the first quarter of 2024 compared to the last quarter of 2023.
This coincides with the end of the tax year with experts citing this rise in pension contributions being contributable to savers making use of all available tax relief.
Alternatively, analysts believe this may be the result of Britons taking advantage increased annual allowance, which rose from £40,000 to £60,000 in the 2023/24 tax year.
In his Spring Budget 2023, Chancellor Jeremy Hunt raised the threshold by £20,000 as part of his "Back to Work" agenda with people now being able to protect more of their hard-earned savings from the tax man.
Furthermore, the lifetime allowance was crapped by Hunt on April 6 in another win for retirement savers.
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Jeremy Hunt has made changes to the pension system
GB NewsThis was the amount someone could build up in pension savings without triggering a tax charge and was set at £1,073,100.
However, with the General Election less than a month away, PensionBee is sounding the alarm that further changes to the pensions system which could see this relief taken away.
Notably, experts are warning that the lifetime allowance could be reinstated by a potential Labour Government.
If so, this may potentially disincentivise many from making additional contributions to their pension pots.
Becky O’Connor, the director of Public Affairs at PensionBee, said: "It’s encouraging to see consumers increasing their pension contributions and taking advantage of the tax benefits associated with this.
"Despite the prolonged cost of living pressures, the rise in the annual allowance threshold appears to have motivated pension savers to prioritise their pension contributions.
"As we look ahead to the election, the potential reinstatement of the Lifetime Allowance by Labour, if elected, could reshape the limitations of the annual allowance and tax penalties.
"Regardless of any change in government, the annual allowance must remain generous enough to incentivise consistent pension contributions, as this will enhance consumers’ quality of life at retirement.”
Female savers saw their average quarterly pension contributions jump by 60 per cent from £873 in Q4 2023 to £1,395 in Q1 2024.
Over the same period, male savers bolstered their average quarterly contribution amount by 64 per cent from £1,242 to £2,038.
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Pension savers are making more contributions to their pots.
GETTYSelf-employed savers also awarded their retirement savings in a boost in the last three months of the tax year.
This group's average quarterly contribution amount rose by 63 per cent from £1,121 in Q4 2023, to £1,822 in Q1 2024.
The number of savers making contributions remained consistent from Q4 2023 to Q1 2024 compared to the year before.
However, their average contribution value jumped by over a quarter from £1,384 in Q1 2023 to £1,762 in Q1 2024.