The lifetime allowance (LTA) on pension savings is set to rise to £1.8m in tomorrow’s Budget, it has been widely reported.

The increase is set to be introduced to encourage people to continue working. The LTA is the maximum anyone can contribute to a pension – at present £1.07m – before facing tax charges.

The BBC reports that the chancellor could also increase the £40,000 annual cap on tax-free contributions to pensions. However, the report said the Treasury had declined to comment.

Higher earners, particularly doctors and consultants have faced issues with the LTA in recent years which has contributed to many taking early retirement in the face of tax charges on their pension contributions.

Newspaper front pages including the Daily Telegraph and The Times also reported on the move, both pointing to it encouraging people to remain in work.

The Times said the increase to the LTA would be a record £1.8m and benefit 2 million people. It also reported the annual allowance would go up to £60,000.

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