The article below was originally published at morganist economics. You can see it at the link below. https://morganisteconomics.blogspot.com/2020/02/optimal-pension-saving-can-be-taken_8.html Copyright © 2020 Peter James Rhys Morgan. Optimal Pension Saving Can Be Taken Further! By Peter Morgan. 12:34 08/02/2020. Currently the lifetime pension taxation exemption allowance is £1,055,000 and the standard annual pension allowance is £40,000. Most individuals in the country are entitled to receive the full lifetime pension allowance by contributing into their pension taking advantage of the £40,000 annual pension allowance. However once an individual has reached an income of £210,000 they are only entitled to pay £10,000 a year into their pension with tax relief. This only provides a total pension pot of £450,000 over a 45 year pension contributing duration. There is a way to make sure every individual in the country regardless of their income can receive the full lifetime pension saving allowance through extending and rearranging the annual pension contribution allowance into different income brackets. The extension of the number of pension contributing years would allow a lower annual pension contribution to be made and enable the full lifetime pension taxation exempt allowance to be reached. There is a technique called the Morganist Optimal Pension Contribution Calculation that determines it. The calculation divides the lifetime pension taxation exempt allowance by the number of pension contributing years. Extending the number of pension contributing years enables the lifetime pension taxation exempt allowance to be reached through making lower annual pension contributions. The cost of annual pension tax relief to the Treasury is lowered by the reduced annual pension contribution allowance. This minimises the amount of money the Treasury has to borrow to pay the pension tax relief contributions reducing interest payments. The lower annual pension tax relief costs to the Treasury make it easier for the government to control its annual expenditure. This will help the government to balance its rates of spending and eventually bring the country out of deficit. The technique of reducing the annual pension contribution taxation exempt allowance and extending the number of years that individuals pay into a pension will provide every individual with the opportunity to reach the full pension lifetime allowance, it will also help to make Treasury cost efficiencies to reduce the deficit. The objective is to provide a pension saving framework which calculates the reduction in the allotted annual pension allowance to enable every individual in the country, regardless of their income, to be entitled to reach the full lifetime pension saving allowance. This process will at the same time provide Treasury cost efficiencies and help to reduce the annual pension tax relief cost at no long term consequence to the pension savers themselves. Pension saving is optimised and the government can take a further step towards balancing its annual deficit. Current Lifetime Pension Allowance. £1,055,000. (LTA / 25 + Annual Contribution Allowance). Divide by 25 years = £42,200. Divide by 35 years = £30,143. Divide by 45 years = £23,445. Currently the annual pension saving taxation exempt allowance is £40,000. By following the annual pension saving contribution brackets below it is possible for all of the income brackets to reach the full lifetime pension saving allowance and reduce the Treasury's annual pension tax relief costs. Notice the £40,000 annual pension saving taxation exempt allowance is only allowed up to £75,000, whereas currently the £40,000 annual pension saving taxation exempt allowance is sustained until £150,000, this reduces the current tax relief costs to the Treasury. Income up to £75,000. Annual Allowance. £40,000. Years Lifetime Allowance Hit. 26.375 years. Income £75,000 to £100,000. Annual Allowance. £30,143. Years Lifetime Allowance Hit. 35 years. Income over £100,001. Annual Allowance. £23,445. Years Lifetime Allowance Hit. 45 years. All of the above annual pension contribution rates give every individual the opportunity to receive the full lifetime pension taxation exemption allowance through extending the duration of pension contributing years. There is an efficiency in the reduction of annual contributions for the new middle income earners, they can still receive the lifetime pension taxation exempt allowance through extending pension payment duration. This is also true for the new higher income annual pension allowance bracket extending pension saving duration, but by more. The reduction of the annual pension saving allowance for the middle bracket pension savers enables a current Treasury pension taxation relief payment decrease. The reduced cost of pension taxation relief generated by the middle bracket pension savers provides new funds to allow the higher income annual pension allowance bracket savers to receive pension tax relief without the cost increasing for the Treasury. The outcome is every individual in the country is entitled to receive pension tax relief enabling them to reach the lifetime pension allowance. The Treasury's current costs for pension tax relief payments are decreased by reducing the annual pension contribution allowances for the middle income bracket earners. The annual pension saving allowances for the different income brackets could be altered to enable every individual to receive the full lifetime pension taxation exempt allowance, but make current Treasury pension tax relief payments lower by extending the duration of payments. The new Morganist Optimal Pension Contribution Calculation offers the opportunity to perform this. The alternative option is to set one annual pension taxation exempt contribution allowance for every individual in the country, then lower the amount of the annual pension contribution allowance and extend the number of years the pension is paid into. An example of this is to reduce the current annual pension contribution allowance of £40,000 to £30,143, which is the middle bracket in the example above. This will enable every individual to reach the lifetime pension allowance in 35 years, the reduced pension payments will generate economic growth.