One possible alteration was thought to be tax-free cash drawdowns, but the chancellor may have turned to salary sacrifice schemes
Rumours about what Rachel Reeves may, or may not, do to pensions in the budget continue to swirl.
One much-debated possible change – cutting the amount of tax-free cash that 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.
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’s “non-cash” based – in this case, extra employer contributions into their pension pot.
