Chancellor urged to resist Budget raid on self-employed pensions

There have been widespread reports that the Chancellor is planning to cut the annual £40,000 limit, which would affect self-employed workers who often make one-off contributions or significant payments nearing retirement.

Zurich says that if the Government presses ahead with changes to the annual allowance, any reduction should be matched by an increase in the number of years people can carry forward unused allowances.

Alternatively, the Government could introduce an age-related annual allowance that would increase as savers near retirement age.

Alistair Wilson, head of retail platform strategy at Zurich, said: “Not everyone pays into a pension in the same way. 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.

“Britain’s growing population of self-employed workers already misses out on benefits such as auto-enrolment, making it harder for them to save for retirement. Restricting the amount they can save would penalise them further.

“The Government should resist any further changes to the pension system. Instead, it should focus on boosting consumer confidence and engagement in pensions by building on the success of auto-enrolment and delivering the pensions dashboard."