This means savers who have accessed their pension from age 55 will see their annual tax-free allowance cut from £10,000 to £4,000 for the 2017/18 tax year.
Tom Selby, senior analyst at AJ Bell, comments:
“Today’s news will come as a bitter blow to thousands of retirees who have used the pension freedoms to access some of their retirement pot from age 55. Many had hoped the general election would put a legal spanner in the works and force policymakers to, at the very least, delay reducing the MPAA until April 2018. These hopes have now been dashed by the Government.
“We do at least have clarity on what the MPAA is for 2017/18, which means advisers and individuals can plan with a degree of certainty.
“But the reality is the UK pension tax regime is a mess, bedevilled by complexity and confusing even to seasoned industry experts. Rather than continuing to tinker with a broken system, the Government should carry out a root and branch review aimed at simplifying the rules and encouraging more people to save for retirement.”