Number of ‘pension millionaires’ actively paying into pots falls

The number of “pension millionaires” actively contributing to their pots has fallen, HM Revenue & Customs (HMRC) figures indicate.

Some 1,700 people with funds of at least £1 million were paying into “relief at source” schemes in 2020-21.

This total was significantly down from 2,700 in 2019-2020, according to the figures obtained following a freedom of information (FOI) request by InvestingReviews.co.uk.

HMRC warned that the figures are likely to be incomplete and schemes are not required to include people who are not actively contributing to their pension when providing it with their data.

Some people may no longer be actively paying into their pension because they have retired.

The pensions lifetime allowance for most people in the current tax year is £1,073,100. The lifetime allowance is the limit on how much people can build up in pension benefits while still having the full tax benefits, before additional charges kick in.

There were 1,600 investors with personal pension pots worth at least £1 million but less than £2 million, according to the latest figures, with the remaining millionaires sitting on pots worth £2 million-plus.

The figures include the Government-backed Nest scheme, and Self Invested Personal Pension Schemes (Sipps), InvestingReviews.co.uk said.

According to the latest data, 1,100 taxpayers were still paying into personal pension schemes in 2020-21 despite their existing pots already exceeding the lifetime allowance of £1,073,100. This was less than half the number recorded the previous year (2,300).

Simon Jones, chief executive of InvestingReviews.co.uk, said: “Pension pots have taken a hammering in recent times as global stock markets have gone into retreat. Even the wealthy are feeling the pinch.

“Investors with long-term investing horizons can take heart from the fact that, historically, markets have always rebounded.

“But it’s a different story for those who were hoping to retire in the near term. Many will now either have to work a little longer, or develop alternative income streams to help them manage the squeeze.”