What changed this year in pensions

We are fairly used to the government meddling with pensions, says David Prosser. And 2016 was no different.

We are fairly used to the government meddling with pensions, and 2016 was no different. Although reforms were less radical than expected, the Treasury continues to cut back on tax breaks for pension savers, and it's likely that we haven't seen the end of this trend.

The year's two most significant changes both took effect in April. Firstly, the pensions lifetime allowance the maximum amount of private pension savings you can amass before tax was reduced from £1.25m to £1m. At the same time, high earners were hit with cuts to the annual allowance, the amount that may be paid into a tax-free private pension each year. For most people, this is £40,000, but the allowance now reduces steadily for people earning above £150,000, to as little as £10,000 for those earning more than £210,000.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.