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There is growing speculation that the way pensions are taxed could be changed in the Budget.
Chancellor Rachel Reeves says she needs to find £22bn and some experts say she could change the workplace or private pension system to find some of that money. This is separate from another debate over state pensions.
There are a number of options that could affect workers getting their first job, those already working, all the way to those who are retired. This is what could happen and why you should care even if you're only 20 years old.
Make employers pay more for national insurance
When you get paid, National Insurance (NI) is deducted and the government spends it on things like benefits and utilities. Your employer must also pay an NI contribution.
However, money going towards a pension is exempt from income tax and NI.
One option for the chancellor would be to force employers to pay at least part of the money they invest in workers' pensions.
This could immediately bring billions of pounds to the government.
However, this added cost to business owners could leave them with less money to spend on hiring and investing. It could therefore become more difficult to find a job.
Companies could also limit salary increases, thereby affecting all their employees, or reduce the pension contributions they make for new employees.
Alternatively, employers currently taking advantage of the NI break by encouraging workers to take less pay and more pension – known as salary sacrifice – could be prevented from doing so.
The appeal of this option for Ms Reeves is that she can raise money with no visible difference in people's take-home pay.
The downside is that it provides less incentive for employers to invest in their staff's pensions. This would mean that when current workers retire, they would not have as much income.
Change the rules on inheritance of pension savings
Various rules exist when it comes to inheriting money from partners or parents upon their death.
Inheritance tax is paid if the estate is valued at more than £325,000, but any money saved in a pension is not taken into account.
Furthermore, anyone who dies before the age of 75 can generally pass on what remains of their pension savings tax-free in the form of capital or income.
If they are 75 or over when they die, their pension money can still be passed on, but it is treated as income and the person they leave it to may have to pay income tax . There's more about these rules here.
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Removing these tax breaks would give the government more money, but it's unclear to what extent. The vast majority of people don't pay inheritance tax anyway because they don't have an estate worth more than £325,000 left.
There could also be anger from people who organized their finances according to the current rules, only to discover that their loved ones would receive much less if those rules changed. This anger would be even greater among those who are already retired, because they have less time to fix it.
The tax-free lump sum could be capped
From the age of 55 (or 57 from 2028), anyone with pension savings can withdraw a quarter of their money as a tax-free lump sum up to a maximum of £268,275.
Some use this money to pay off their own mortgage, if they have one. Others use it to help their children and grandchildren buy a first home.
The chancellor would consider lowering the ceiling.
By limiting the tax-free limit, people will end up paying more income tax when they retire. However, questions arise over how much additional money this would allow the government to raise and when.
Making provision for those who have already exceeded the limit, or are considering doing so, could also prove complex and reduce the amount of additional tax collected by the Treasury.
Introduce a single rate of tax relief for pensions
The preparation of each budget is usually marked by speculation about changes to pension tax relief.
When you pay into a pension, some of the money that would have been paid to the government in tax instead goes into your retirement savings, known as pension tax relief.
You don't pay tax when you invest money in a pension, but you do when you treat the money as income.
Under the current system, you get pension tax relief at the same rate as your income tax bracket, meaning basic rate taxpayers get 20% relief.
This means that for higher rate taxpayers the relief is more generous, at 40% or 45%, depending on your income tax rate. You can learn more about how this is done here.
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Some economists say it would be fairer to give the same level of relief to everyone.
Setting a flat rate of relief at, say, 25%, could benefit lower-paid workers who currently receive 20% relief, by further reducing their tax bill.
However, higher rate taxpayers with an annual income of around £50,000 or more would lose out, as the tax relief would be less than it is now.
An additional, but important, complication is that a large number of public sector workers, as well as some in the private sector, benefit from so-called defined benefit (DB) pensions.
Ensuring that the correct level of tax relief is applied to higher rate taxpayers receiving these pensions would be extremely complex.
This could mean they automatically get a 40 or 45% tax break and then then have to pay a tax bill – perhaps thousands of pounds – to pay some of it back.
Tom Selby, of investment platform AJ Bell, says it would likely cause “a bitter row” with NHS staff, teachers and civil servants who could fall into this category.
Given that ministers have said they will not raise taxes on workers, this would become a tough policy sell – and reports suggest changes have now been ruled out by the Treasury.
