PRESS RELEASE : Autumn Statement – PwC comments on the Triple Lock and Lifetime Annual Allowance (LTA) [November 2022]

The press release issued by PWC on 17 November 2022.

Raj Mody, global head of pensions at PwC comments on the triple lock and state pension:

“The Chancellor’s decision to retain the triple lock will ensure the state pension does not lose value in real terms. Based on September’s inflation rate of 10.1%, it will take the basic rate from £142 to £156 and the new state pension up from £185 to £204 a week. For the 12.5 million pensioners who fully rely on the state pension this will be welcome news.

“Looking forward, if the triple lock continues, then it’s likely that the state pension will catch up with the tax-free Personal Allowance by the end of the 5-year period that the Personal Allowance has been frozen for. That will create an interesting policy situation for future Governments, which may be better tackled earlier than later. To end up in the situation where the state pension itself is taxed seems odd, for the Government to give out with one hand and then take back with another.”

Roshni Patel, DC pensions and benefits lead at PwC comments on the lifetime allowance:

“There was no further news on the Lifetime Allowance or Annual Allowance, suggesting they will continue to remain frozen for two more years. People’s pensions savings will start catching up with the frozen Allowance. It equates to £53,000 per annum for a Defined Benefit (‘DB’) scheme member, and would deliver less than that for a Defined Contribution (‘DC’) member, maybe around £45,000 depending on the going rate for annuities at the time of retirement. Apart from the disparity between DB and DC savers, these amounts might seem a lot but won’t feel like that in real terms at the end of the frozen period.

“With the reduction in dividend and capital gains tax allowances, it does make saving into a pension or ISA more desirable, instead of holding investments directly.”