Top up your pension NOW

If you can to up your pension before tomorrow’s Budget, do it, says Merryn Somerset Webb.

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Put some money away before it's too late
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I'm about to write something I have written many, many times before. But it is just as important now as it has been on every other occasion. Here goes. If you can to up your pension before tomorrow's Budget, do it.

Philip Hammond needs to find a way to chuck something into the social care pot. Pension tax relief is still costing us going on £40bn a year (even after the various fiddles and cuts of the last five years), so it may be that he cuts the annual allowance to £30,000 or even £20,000 (it is currently £40,000 a year if your income is under £150,000 and tapering to £10,000 thereafter).

It may be that he cuts the lifetime allowance again; it may be that he finally does the thing experts have been expecting for years and puts in place a flat rate of relief so everyone gets 30% rather than their marginal rate of income tax back (the third is the least awful if we want to see redistribution alongside a fall in the cost of tax relief).

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I don't really think he should do any of these things in our ideal world Hammond gets rid of both the taper and the lifetime allowance. But he needs more cash and those who are "rich" in pension terms remain a pretty easy target (and one that hasn't much of a leg to stand don when it comes to public complaining).

So if you are in the upper tax bracket, haven't hit your Lifetime Allowance (now £1m), aren't caught up in some hideous taper problem, haven't yet used up your annual allowance and you have some spare cash (that you are sure you are OK to lock up until you are 55), stick it into your SIPP now. Tomorrow might be too late.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.