Top up your pension NOW

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Put some money away before it’s too late

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).

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.