George Osborne is likely to announce a pension overhaul in his budget on 16th March 2016, which could see a move to a flat-rate government contribution on pension payments.
Currently, individuals benefit from pension tax relief at the same rate as their income tax, whether 20%, 40% or 45%.
Several people on the periphery of the discussions have revealed that a single pension savings incentive of between 25% and 33% is likely.
This would mean a reduction in government contribution for higher earners but a larger incentive for lower earners.
Although the changes are expected to be announced in the Budget, they are unlikely to come into effect for at least 12 months, to allow time for the industry and savers to prepare for the reform.
Along with the single tier state pension coming into force from 6th April 2016, it seems we might finally be moving towards a more straightforward pension regime although many planning opportunities will remain and it will still be important to ensure your pension capital is invested appropriately.
Source: www.ft.com, 15 January 2016