It's the question on everybody's lips (well, everybody at City A.M. anyway): what will pensions in the UK look like post-Budget 2016? Several suggestions have been bandied around, but which ones might you want to start banking on and which can you probably afford to ignore?
Relief rates slashed for higher earners
Bad news if you pay income tax above the basic rate: experts at Hargreaves Lansdown Pensions think a cut to relief rates for higher earners in one form or another is close to certain. At present, tax relief on pension withdrawals is applied at the same rate that income tax is paid at and one of the most talked about possible changes is replacing this with a flat rate of relief.
Pensions Isa introduced
Another much talked about possibility, the so-called pensions Isa would see contributions become taxed instead of withdrawals. Hargreaves Lansdown feels there's a pretty low chance of this one happening, and it's previously proved pretty unpopular with plenty of others as well. The Association of British Insurers has warned that it will slash people's incentive to save, while former pensions minister and now director of policy at Royal London Steve Webb has slammed the system suggestion on more than one occasion.
State pension shaken up
Campaign group Women Against State Pension Inequality (Waspi) has been furiously fighting for fairness for the women born in the 1950s who watched in despair as their pension age got hiked, sometimes with little or no warning. While its efforts recently resulted in the issue being debated by MPs, it's not clear if that will lead to any big Budget day announcements. However, in last year's Autumn Statement, George Osborne did pledge to maintain the triple lock system for calculating the rate of state pensions for the remainder of this government's term.
Salary sacrifice scrapped
While the ability to forgo part of your pay in return for employer pension contributions is pretty popular, it's also costing government a pretty penny. Osborne may not decide to scrap the scheme entirely, but Hargreaves Lansdown thinks it's likely he'll do something to ease the financial burden. Meanwhile, Aon Hewitt has pegged to odds of saying goodbye to salary sacrifice next month at 4-1, with senior partner Kevin Wesbroom adding: "It’s become increasingly clear that the Treasury really dislikes this horse and sees salary sacrifice as tax avoidance on a massive scale and wants to close this stable down."
No pension announcements at all
Not likely! In the Autumn Statement, it was said that the long-awaited outcome of the Treasury's consultation on pensions tax relief would be announced in March's Budget, so, unless Osborne wakes up on Wednesday 16th feeling forgetful, odds are we'll be hearing something about retirement savings. However...
More thinking time required
....what is likely, according to Hargreaves Lansdown, is that whatever Osborne does suggest is going to trigger another consultation to iron out the precise t's and c's.