Savers are rushing to top-up their pensions amid fears chancellor Philip Hammond will deliver a further cut to the annual allowance in this month’s Budget, Zurich says.
Cash flowing into pensions on Zurich’s investment platform soared 98 per cent in September compared to the annual average, the firm has found.
The value of one-off pension contributions also jumped 161 per cent from the 12 month average as savers invested larger amounts.
While the provider says it could not reveal the monetary value of the extra amounts being put on the investment platform as the information is commercially sensitive, it points out savers invested double the average last month.
Zurich’s head of retail platform strategy Alistair Wilson says savers are making the most of the higher pension savings cap while they still can, and are worried the government could slash the savings limit in the Budget next Monday.
There is frequent speculation before each Budget whether the government will change tax relief with former pensions minister Ros Altmann arguing the Treasury will steer clear of radical change amid Brexit uncertainty.
Yet Wilson adds savers are rushing to top-up their pots and savers are also paying in more than the current £40,000 annual limit to take advantage of unused allowances from previous years before it is too late.
Although any reduction in the annual allowance would be targeted at wealthy savers, Wilson says self-employed workers will suffer the most.
He adds not everyone pays into a pension in the same way and self-employed workers often have to choose whether to contribute to a pension or invest in their business.
This means they may only be able to make ad hoc contributions as they go or larger payments nearing retirement, so restricting the amount they can save in any year would penalise them further.
Wilson says: “To soften the blow of any lower annual allowance, the chancellor should consider increasing the number of years people can carry forward unused allowances, or introducing an age-related allowance that rises as consumers near retirement.”