Gareth James, head of technical resources at AJ Bell, comments:
“The proposed cut in the MPAA to £4,000 is likely to be relevant to a tiny number of savers and it is difficult to see how the Government is going to raise anywhere near the £70 million a year it anticipates. The consultation document points out that only 3% of individuals aged over 55 make pension contributions of more than £4,000 a year and our experience is that the number of people who have used the pension freedoms that make those kind of contributions is even lower. It will be interesting to see whether the Government proceeds with this proposal once it has heard representation from the industry about the limited impact it is likely to have.”