Commenting on the Government’s confirmation to reduce the Money Purchase Annual Allowance to £4,000 from £10,000, Rona Train, Partner at Hymans Robertson says:

“This decision, which will save the government around £70m p.a. has been made at the great expense of those wanting or needing to supplement their retirement income. The Government is clearly trying to stamp out recycling pension savings - whereby people could get a double hit of pensions tax relief by withdrawing money from their pension and then re-investing it. However, retirement is no longer the cliff edge event seen in previous generations and is now often a process that continues over a number of years. In some cases savers are simply unable to retire early but will equally struggle to continue working full time, whether this be for health reasons or caring responsibilities. In these cases the government should be doing all it can to offer support. While this decision, undoubtedly, will bring clarity for Trustees, it remains contradictory to the ethos of pension freedoms. For too long now, Trustees have been unable to provide definitive guidance to their members and some members may already contributed more than the £4,000 allowance as a result.  They will feel the full force of this proposal given its retrospective enforcement.”