Rise in pensions

CONCERNED about a labour crisis particularly in the NHS, Jeremy Hunt will give middle­class workers a pension boost in a bid to encourage them to extend their careers into later life.

Whitehall sources said the Chancellor will use the Budget to unveil ‘significant’ increases in pension allowances that are blamed for driving doctors and other professionals out of the workforce.

The £1 million lifetime allowance on tax­free pension savings will see the first substantial increase for a decade.

The £40,000 cap on annual pension contributions will also be raised. Both moves are designed to tackle the so­called 'pension trap' which can leave some professionals facing punitive tax charges if they continue working into later life.

Tory former minister Sir John Redwood added: “I have been very worried about the loss of a lot of experienced doctors, who say that taxation of their pensions is one of the big issues driving them out of the profession.”

This move comes following the Treasury’s plans to water down the increase in the numbers of doctors and nurses in the NHS.