Cuts to the lifetime allowance (LTA) should be reversed, or the limit scrapped altogether, in light of the bleak outlook for annuity rates, an adviser has said.
The Bank of England's (BoE) move to cut interest rates to 0.25% has negatively affected annuity rates - already at record lows - as they are based on government bond yields or gilts. The LTA, the total limit people can save into a pension fund, was reduced to £1m in April this year. Tilney financial planner Gary Smith said at present, a £1m purchase of a joint life annuity for a 65-year-old, increasing by RPI inflation will currently provide a £25,120 annual income or £18,843 if the saver takes their 25% tax-free cash. This was well below the average UK salary, Smith added. He urge...
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