No change to pensions tax relief or to the annual allowance is excellent news for those individuals squirreling away their earnings into pensions. This means you can make a contribution of up to 100% earnings, capped at ?50,000.

Even non-earners can contribute up to ?3,600 gross into pension, and benefit from basic rate relief.

The announced changes to the higher rate tax band means that even more people will pay higher rate tax. Firstly the higher rate threshold is frozen at ?42,475 in 2012/2013 and then is cut further to ?41,450 in 2013/2014. At this point HMRC confirm that a further 300,000 individuals will fall into higher rate tax. Paying into a pension means you can claw back the additional higher rate tax via your tax return, and build a decent retirement pot.

No further details were given of the proposed universal state pension, but the intention is that the basic and second state pension benefits are to be combined. Government has already indicated that this will be a flat rate of roughly ?140 per week, for those with a full National Insurance history. There will be winners and losers when this change is implemented, but what is certain is that it will not provide a decent living in retirement.

Budget anecdote

• Tax reliefs are available to encourage pension saving.
• Everyone can benefit, including non-earners.
• Increasing numbers of high earners will be able to claw back their higher rate tax on pension contributions.
• State pensions provide only a basic level of income in retirement.
• You will have to wait longer to receive a state pension.
• Take responsibility now and save as much as possible for a better retirement.