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).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
-
South Korean won hits 15-year lowAfter Yoon Suk Yeol's failure to declare martial law, South Korean markets are reeling, with the weakest won since 2009. Will this worsen the Korea discount?
-
House prices return to growth, Zoopla saysAverage house prices increased 1.9% in the year to November, Zoopla's latest house price index shows
-
Our pension system, little-changed since Roman times, needs updatingOpinion The Romans introduced pensions, and we still have a similar system now. But there is one vital difference between Roman times and now that means the system needs updating, says Merryn Somerset Webb.
-
We’re doing well on pensions – but we still need to do betterOpinion Pensions auto-enrolment has vastly increased the number of people in the UK with retirement savings. But we’re still not engaged enough, says Merryn Somerset Webb.
-
Older people may own their own home, but the young have better pensionsOpinion UK house prices mean owning a home remains a pipe dream for many young people, but they should have a comfortable retirement, says Merryn Somerset Webb.
-
How to avoid a miserable retirementOpinion The trouble with the UK’s private pension system, says Merryn Somerset Webb, is that it leaves most of us at the mercy of the markets. And the outlook for the markets is miserable.
-
Young investors could bet on NFTs over traditional investmentsOpinion The first batch of child trust funds and Junior Isas are maturing. But young investors could be tempted to bet their proceeds on digital baubles such as NFTs rather than rolling their money over into traditional investments
-
Negative interest rates and the end of free bank accountsOpinion Negative interest rates are likely to mean the introduction of fees for current accounts and other banking products. But that might make the UK banking system slightly less awful, says Merryn Somerset Webb.
-
Pandemics, politicians and gold-plated pensionsAdvice As more and more people lose their jobs to the pandemic and the lockdowns imposed to deal with it, there’s one bunch of people who won’t have to worry about their future: politicians, with their generous defined-benefits pensions.
-
How the stamp duty holiday is pushing up house pricesOpinion Stamp duty is an awful tax and should be replaced by something better. But its temporary removal is driving up house prices, says Merryn Somerset Webb.
