Continual investment growth and the frozen allowance which remained untouched by the Chancellor means the issue may get worse.
This was highlighted by Peter Glancy, Head of Policy at Scottish Widows, who said: “Normally, investment returns counter the effect of inflation. However, when you face a tax penalty of 55 percent when your investments exceed the LTA, you could actually be fined if your assets keep pace with inflation.
“This clearly doesn’t make any sense and the Government needs to consider its decision to freeze the LTA.”
HMRC said reductions in the annual and lifetime pensions tax allowances since 2010 have resulted in a significant increase to the number and value of charges.
Becky O’Connor, Head of Pensions and Savings at interactive investor, said: “People and their employers are contributing more to personal pension schemes and therefore benefiting from more tax relief through working life, which is a good thing.