ONE of the hardest things people struggle to talk about is money, with many people finding it difficult to open up about financial matters, from budgets to savings and investments.

But the topic of money will be firmly in the spotlight on March 11 as the newly appointed Chancellor of the Exchequer, Rishi Sunak, like many before him, stands up in parliament to announce the UK Government's spending plans.

This one has special significance though. Rather than just setting out the country’s finances for the year ahead, the expectation has been set that this budget is about ‘a decade of renewal’. So in the context of Brexit approaching the finishing line, the chancellor, clasping his red budget box, will emerge from 11 Downing Street intent on starting a new chapter for the economy across the whole of the UK. The aim will be to set us on the right course for the next 10 years, ‘levelling up’ across the nation and unleashing our full potential.

So, through the din of heckles emanating from the opposition benches, what personal finance announcements should people be listening out for? It’s likely that changes to tax and pensions will feature, and we remain hopeful of progress on social care funding, but how will that affect you on an individual level and what affect will any changes have on saving behaviours?

On the subject of pensions there may be significant change afoot. Rumours and speculation have been circulating for a number of weeks of not just changes to stop penalising senior professionals in the NHS but radical reform to pensions tax relief involving cutting tax breaks for higher earners and instead introducing a flat rate of relief for everyone.

While we need to see what will be unveiled on the day, it’s worth considering the ramifications such a bold step could have for higher rate tax payers as well the wider implications this could have on the country’s retirement savings.

Everyone who pays into a pension is entitled to a ‘tax relief’ top-up on their personal contributions, essentially free money from the government to encourage and incentivise us all to save for our retirement, rather than relying simply on the state pension, which is very unlikely to meet most peoples’ retirement aspirations.

The amount of tax relief you currently receive on your pension contributions depends on your top rate of income tax. This means higher and top rate taxpayers get a bigger top-up than basic rate taxpayers which many view as unfair.

A move away from this, for example, to a flat rate somewhere between basic and higher income tax rates will have winners and losers. Those non-taxpayers and basic rate taxpayers would welcome the change, while higher and top rate taxpayers would see their government top-ups reduced. But one possible outcome is the flat rate would be set at the basic rate. This would mean basic rate taxpayers are no better off but those paying higher rate tax, many of whom are far from wealthy, would suffer a major dent in their retirement savings.

It’s worth noting that the impact of this will be felt greater for higher and top rate tax payers in Scotland. As a devolved power, income tax is set at different rates here. This disparity with the rest of the UK means people in Scotland pay higher rate income tax sooner, once they earn above £43,430. Elsewhere in the UK, higher rate tax is on earnings above £50,000. But conversely those in Scotland earning between £43,431 and £50,000 get the higher tax relief top-up on pension contributions, so the impact of moving to a flat rate would be felt ‘sooner’ in Scotland.

In terms of simplicity, setting a flat rate relief of 33% would see the Government add £1 for every £2 from individuals. But if set below 30%, higher rate taxpayers expecting to pay higher rate tax in retirement might find pension saving unattractive, undermining the success of automatic enrolment which ‘works’ because pension saving is currently in virtually everyone’s interest.

There’s a risk that a rush to cut pensions tax relief to save the Chancellor money today could end up causing long term damage to UK retirement savings. We’re urging the chancellor to avoid going too far, too fast. We’d welcome testing any new approach with savers to understand how any changes would affect savings behaviours. There are multiple long-term benefits to making adequate pension saving, so we hope the chancellor would first carry out a full consultation to avoid any ‘unintended consequences.’

Now more than ever, people have a personal responsibility for their own financial future and should be encouraged to save so they can afford the retirement they aspire to. Pension saving is the obvious way of putting money aside for retirement. It’s vital that the government continues to make pension saving attractive, offering fair incentives through the tax system.

As a nation – be that UK or Scotland - we all need to talk more about money and in particular pensions. On budget day, there will be a lot of conversations in Parliament about finances. But we hope there will be many more conversations with the family around the kitchen table.

The benefits of talking about our finances, and getting to grips with them, can be enormous with better outcomes for our health, wealth and long term happiness.

Steven Cameron is a pensions director at Aegon