LOOK OUT FOR BIG REFORMS

THE pension rules seem to change every few years.

When you’re deciding what to do with your pot, remember that each future government will have its own ideas about how to get Britain saving.

Experts reckon pension tax breaks will become less generous for higher earners. So make the most of today’s tax relief rates. Currently, basic rate taxpayers get 20 pc tax relief, higher rate payers 40 pc, and additional rate payers 45 pc. There have been calls for a flat rate of 30 pc.

Experts also think the Government will reduce the lifetime allowance — the amount you can save while benefiting from tax relief — from its threshold of £1 million.

Tom McPhail of pensions firm Hargreaves Lansdown says: ‘Further changes are inevitable, though in the short term it’ll be more salami slicing than big change.’

Other changes could include final salary pensions becoming more flexible. Experts such as former pensions minister Steve Webb want an option to cash in a chunk of money from these pensions.

This would allow people to have a guaranteed income for life but also allow them to spend some of their cash.