The Chancellor has announced some changes to pensions taxation in the Spring Budget. The Annual Allowance (which is the maximum amount of pensions savings an individual can make each year before incurring a tax charge) will increase from £40,000 to £60,000 from 6 April 2023, with individuals continuing to be able to carry forward unused Annual Allowances from the three previous tax years. Changes have also been made to the Lifetime Allowance, the charge for which will be reduced to zero from 6 April 2023, before being fully abolishing in a future Finance Bill. Other changes were made to the Money Purchase Annual Allowance and Tapered Annual Allowance. More detail can be found in the Budget document and the Pension Tax Limits policy paper.

These changes will be welcomed by higher earners in the LGPS, as well as some middle-income earners with long local government careers who, before the recently announced change to the valuation date, were in danger of having to meet Annual Allowance charges for the first time due to the effect of high inflation rates. However, it should be remembered that the majority of LGPS members will not be affected by these changes and that the average LGPS pension in payment is only around £5,000 per annum.