What are the government’s plans for your retirement?

Unlike the Conservative Party, Labor made no promises in the run-up to the election that pension tax relief would remain untouched.

Rachel Reeves has previously said that she would support introducing flat rate pension tax relief which, while benefiting basic rate taxpayers, would leave higher and additional rate taxpayers worse off.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The current system of pension tax relief provides a huge incentive to save into a pension fund, with contributions attracting relief at your marginal rate. This means someone paying tax at the higher rate gets relief of up to 40% on their contribution and taxpayers at the additional rate get up to 45%.

“However, if the government opted for a fixed level of pension tax relief – say 30% – then these groups would be hit particularly hard. This would mean a pension contribution of £1,000 would cost £700, rather than £600 or £550 as is currently the case. However, this would be even better news for those paying tax at the basic rate as the same contribution would currently cost them £800.”

It is unlikely that any changes to pension tax relief, if introduced, will be retrospective, so any tax relief you have had in the past should be safe. However, if you are worried that tax breaks will be limited in the future, you may want to consider taking advantage of the current rules.

Currently, you can get tax relief on pension contributions of up to 100% of your income, or £60,000 per year, whichever is lower. If you earn £70,000 a year, for example, that means you could pay up to £60,000 of that amount into your pension.

Any pension payments you make over the current £60,000 threshold will be subject to ordinary income tax rates. You can also carry forward any unused Annual Allowance from the previous three years, provided you were in a pension scheme in those years. You can learn more about carryover in our guide Pension carryover explained.