Mr Glancy also highlighted the “spending power” of larger pension pots which could become money for the Treasury’s pocket in the form of VAT, greater corporation tax on profits, and PAYE income tax from wages of workers.
As a general point, most people are not usually impacted by the lifetime allowance, but a freeze is likely to mean individuals are forced to bear this in mind more when it comes to retirement.
With interest also accruing on a pension over one’s lifetime, it could be easy for some to exceed the lifetime allowance.
Gareth Jenkins, Zurich’s Head of Life Product and Inforce described the move taken by the Government today as “punishing” for pension savers.
He said: “There’s no easy way to fix the nation’s finances but a raid on pensions is particularly punishing, especially alongside the existing limits on annual allowances.
“Freezing the lifetime allowance is a nothing less than a tax on growth. This will hit people on middle incomes who save hard or invest wisely, including NHS doctors and headteachers. With the threshold frozen, more people will be dragged into the tax net, as inflation and wages continue to rise over time.
“Ultimately, this could drive disillusioned savers away from pensions. Savers making long-term decisions for retirement need certainty, not continued tinkering and piecemeal changes.”