Pensions What changes might the chancellor be planning in her budget?

Rumours about what Rachel Reeves may or may not do to pensions in the budget continue to swirl.

- Rupert Jones

The much-debated possibility of cutting the amount of tax-free cash people can take from their pensions is said by some to be off the table, but reports have emerged that the chancellor has “salary sacrifice” pension schemes in her sights.

What is salary sacrifice?

Salary sacrifice has long been associated with initiatives such as the government-backed cycle-to-work scheme (also said to be in the chancellor's mind). However, a growing number of companies are offering pension salary sacrifice as a perk, and it can be a very tax-efficient way of saving into your workplace scheme.

It involves an employee agreeing to give up some of their salary and move the amount they would otherwise receive into a benefit that is “non-cash” based - in this case, extra employer contributions into their pension pot.

These schemes can run alongside conventional workplace pension contributions - if your employer lets you make “additional voluntary contributions” this might be through salary sacrifice.