Whilst the majority of Gloucestershire was tied up, either directly or indirectly, with Cheltenham races six weeks ago, the Chancellor was busy quietly delivering his annual Budget. There wasn’t actually much to it; all of his main tax rate changes had been announced last year.

Not much to it, that is, except for a bombshell change to the amounts you can save, both annually and in your lifetime, into a workplace pension. State pensions were already getting their biggest yearly increase in decades, courtesy of high inflation, and now the Chancellor is giving greater freedom to private pensions too. For many racegoers that week, this will be a much bigger winner than having a tenner on that 66-1 shot that romped home on Gold Cup day.

The annual limit for most has increased from £40,000 to £60,000

Pension legislation sets limits on how much you and your employer can contribute into a pension scheme every year. For most people, the annual limit was £40,000, although it reduced significantly for those on very high salaries. The Chancellor upped it at a stroke to £60,000 per annum. Industry sources project that this would reduce the time it takes to build up what they see as a ‘comfortable’ pension for a family by about a quarter.

Ah, but what about the lifetime cap on how much money you can save into your pension pot without incurring penalty rates of tax to withdraw it? Surely the Chancellor’s move on the annual limit simply means that you will reach that cap, which stood at a little over £1 million before the Chancellor’s speech, more quickly? Did he therefore increase that cap too by a similar margin? Nothing of the sort; he abolished it altogether!

Encouraging the over 50s back into the workforce

The government’s arguments are that it will encourage the over 50s back into the workforce, as they had left in droves during the covid pandemic, and that it would encourage doctors, who were quickly reaching the lifetime cap via their NHS pensions, to remain in service and not seek early retirement.

Will they be right? Time will tell, and a change in government may well bring a reversal of the rules, but in the short term it is for some people their best winner of Cheltenham week.