Lifetime allowance to rise to £1.073m as inflation falls to 1.7%
The lifetime allowance will rise to £1,073,000 from next April as inflation in the year to September stands at 1.7%.
The Consumer Prices Index (CPI) figure, published today (16 October), is used to calculate the allowance on an annual basis. In April next year the allowance will increase in-line with inflation from the current level of £1.055m.
While Aegon pensions director Steven Cameron said "any increase is welcome", he noted that "these increases are in line with price not earnings inflation".
He added: "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."
For defined benefit pensions, the lifetime allowance is set based on an annual pension and is expected to grow from £52,750 to £53,750.
Meanwhile, with the state pension currently increased by the ‘triple lock' - the highest of either earnings growth, price inflation, or 2.5% - state pensioners are now set to face an increase of around 4%, as the figure was this year aligned with higher earnings growth.
State pension recipients will see their annual flat-rate state pension rise next April to a maximum of £175.20 a week from the current level of £168.60.
Cameron said the increase to the state pension "will be welcomed" but added that, for those over 75 who do not receive pensioner credit, the increase will be "partly wiped out when they start having to pay for their annual TV licence fee".
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