PFS calls on Govt to remove lifetime allowance taper limit

The Personal Finance Society (PFS) has called on the Government to remove the limit for the lifetime allowance taper, or at the very least increase the limit, ahead of next week’s Budget announcement.

The professional body warned that under the current scheme, the lifetime allowance taper is a huge barrier for senior professionals – such as doctors and head teachers – under both defined benefit and defined contribution pension schemes.

The PFS said it is urging new Chancellor, Rishi Sunak, to adapt the current limit to ensure people aren’t ‘punished for saving’ and end the trend of senior professionals retiring early to avoid tax penalties on their retirement funds.

The society, which has more than 40,000 members, revealed several other areas it is pursuing action ahead of the 11 March Budget, and also urged the Government to undertake a ‘root and branch’ review of the Financial Services Compensation Scheme. The PFS said this could create a ‘fairer and more sustainable system’ of collecting levies linked to better public financial awareness, engagement and trust.

The professional body suggested that improving consumer confidence to engage in their financial wellbeing as a potential solution – to reduce financial uncertainty for advisers currently facing ‘soaring’ professional indemnity insurance premiums and increasing levy costs.

The PFS also indicated the Government, to attract the next generation of financial advisers, should reform the use and scope of the apprenticeships levy – by including resit costs and professional qualifications under the scheme.

PFS chief executive, Keith Richards, commented: “The points we set out here highlight areas in which there is huge potential for improvement to conditions, so that customers, particularly the most vulnerable, can receive best possible outcomes.

“With so much innovative activity ongoing already across the profession, we simply ask the government to support our profession in unlocking our potential for the benefit of our regions, our communities and for the public.”

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