Pension contributions budget worries

[Cinbal]

I keep hearing that Labour want to potentially reduce pension contribution tax relief in the budget. But I’m not sure what this will mean for me. Does anyone understand it?

I am in the 40% tax bracket. Fortunate I know, but I wouldn’t consider myself wealthy despite earning above average (not that much above average. I am way way WAY lower than £100k pa, for example). What with two kids, mortgage, cost of living etc, I don’t have much left at the end of the month despite driving a shit car and never going abroad.

But I save a lot into my pension, and get 40% tax relief. I think this essentially means that the amount I save into my pension effectively gets taken off my salary when it comes to them working out how much tax I owe.

If they change it so that I only get 20% relief, will that mean that the tax I owe goes up? As far as I can work out, that would in reality mean a take home pay cut. The amount I was left with after PAYE had taken its taxes would be less than before. Is that right? How does that chime with Labour’s plans not to tax hard working people?

I’m in a defined benefit public sector scheme so not sure if this makes any difference to the outcome. It does make a difference in terms of just paying in less, because I have to pay 13% of my gross salary or nothing.

Does anyone know if I’m right about all this?

Why not just wait for the budget and see what happens?

Soaking up media speculation and panicking about it is pretty pointless. Until there is an announcement, no one can tell you what will happen.

OP you are right, but most commentators are saying this is why the Chancellor won't bring in a flat rate as it would disproportionately impact public sector workers like yourself who have to pay a certain proportion of their salary into a pension scheme (or completely opt out).

‘Highly unlikely’ Chancellor will introduce flat rate of tax relief in Budget - Pensions Age Magazine

No-one can tell you if you're right because no-one knows yet what will be in the budget.
Wait until it's actually been announced and then look at the implications for your take home pay, and pension, after that.

Thanks for the replies. That article is very helpful.

I know that nothing’s been announced yet, but I like to be prepared. We’re about to get some back pay, but if there’s a chance that my take home will go down hundreds then I will save it not spend it, for example.