The latest CPI figure has been recorded at 1.7% in September 2019, meaning the pension Lifetime Allowance (LTA) is boosted to £1,073m from April 2020, and State Pension increases are confirmed.
The Annual Allowance remains frozen at £40,000.
Royal London pension specialist Helen Morrissey said: “This exposes the real lack of joined up thinking when it comes to this ridiculously complex web of tax allowances and highlights the need for urgent reform.”
In addition, retirees are in line for a bumper 3.9% state pension increase, after the September inflation figures.
This is because under the state pension triple-lock, annual payments increase by the highest of average earnings in July, CPI inflation in September or 2.5%. As a result, the ‘old’ basic state pension will rise by £5.05 a week to £134.25, while the ‘new’ state pension will increase by £6.60 a week to £175.20.
This almost 4% increase in the state pension is more than double the rise in average prices during September and thus a real boost to people’s incomes.
The headline CPI rate was a little lower than expected, helped by a fall in petrol prices.