The UK’s lifetime allowance (LTA) is set to increase by 2.4% to £1,054,800 ($1.4m, €1.2m) in April 2019.
Following several years of substantive cuts, the LTA will go up by the September 2018 consumer price index rate, which has just been published.
Having risen to £1,030,000 in financial year 2017/18, it will increase by £24,800 in 2018/19.
Easing restrictions
Hargreaves Lansdown’s head of policy, Tom McPhail, says: “Many people would like to see the lifetime allowance scrapped because it penalises good behaviour; those who save prudently and invest well are likely to be taxed for their pains.
“In the meantime, even an inflation-linked increase to the limit will be welcomed by the increasing numbers of people who are now being caught by this restriction.”
The state pension will rise not by inflation but by another element of the triple lock because earnings growth was 2.6% in July 2018 and that is higher than inflation or the 2.5% minimum.
The expected figures for the state pension therefore are £168.60 a week, and an annual state pension £8,767.20.
McPhail says: “One of the most brutal lessons of the last election campaign for the Tories was to not take their core constituency for granted: don’t upset pensioners. It was no surprise then last week to see the government reiterate its commitment to the triple lock for the remainder of this parliament.
“At some point in the future a government (presumably not this one) is likely to have to grasp the nettle and move away from the triple lock. If this doesn’t happen, then the state pension will inexorably increase relative to earnings and inflation. In the meantime, the state pension provides pensioners with a vital bedrock income to cover much of their essential expenditure in retirement.”
