Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • January 2014
01

Further personal allowance hikes 'could hit pension saving'

Open-access content Thursday 16th January 2014 — updated 5.13pm, Wednesday 29th April 2020

Proposals to increase the income tax personal allowance to £12,500 could hit pension savings by taking many low-paid workers out of auto-enrolment, a report has warned today

The CentreForum think-tank today called for the next government to prioritise increases in the threshold at which National Insurance contributions are paid in a bid to ease the squeeze in living standards.

It warned that Liberal Democrat party policy to increase the personal allowance tax threshold from £10,000 to £12,500 - so all earnings up to the National Minimum Wage are free from income tax - would hit pension saving.

Under the government's auto-enrolment scheme, workers are enrolled in workplace pensions when their earnings hit the personal allowance threshold, which will be £10,000 from April. If there were further above-inflation increases in this allowance without decoupling the auto-enrolment trigger, low-paid workers' pensions savings would therefore suffer, the Making allowances report stated.

'Increases in the personal allowance currently therefore take people not just out of income tax but also out of auto-enrolment. This will leave them and their employers better off in the short term, but harm their private pension saving.'

Adam Corlett, economics researcher at CentreForum and report author, warned that poorer households could see little benefit from future increases in the income tax personal allowance. 

'It's crucial to get these expensive tax cuts right, and they should be focused as far as possible on poorer workers,' he said. 

'The policy case for favouring National Insurance cuts is clear and could take the absolute poverty line out of all direct tax.'

This article appeared in our January 2014 issue of The Actuary.
Click here to view this issue
Filed in:
01
Topics:
Pensions

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Underwriting Risk Manager

London (Central)
£85K-£95K + Benefits
Reference
124386

Reserving Manager (Contract)

London (Central)
£1200 - £1400 per day
Reference
124385

Life Actuary - Contract - IFRS 17 Financial Impact

England, London / England, Bristol / North Yorkshire, England
£900 - £1150 per day
Reference
124384
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2022 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ