In the small print of Alistair Darling’s Budget report are plans to tax anyone earning more than £150,000 on the payment that their employer makes into their company pension.

The new plans will mean that the Treasury can bank on an extra £2.9 billion a year, which is the equivalent to around a penny on the basic rate of income tax.

Although these are just plans and according to the current study effects will not be felt for 3 years, they could finish off the few remaining final-salary schemes.

But how will this work? It will mean that someone who earns £230,000 a year and contributes 6% of their incomes to a final salary pension, will be about £16,000 a year worse off.

The pension revelation will be a further blow to high earners who will now face a 50% rate on their income tax from next year, a reduction in their tax relief and the removal of their personal allowance.

Currently company pensions allow employees to claim tax relief on contributions, but from 2011 those who earn more than £150,000 will have their tax relief reduced from 40% to 20%, if they earn more than £180,000.

These plans are all part of the Government’s rather controversial decisions that are affecting pensions. In fact, Gordon Brown’s 1997 decision to remove tax relief from dividends received by pension funds has been blamed for undermining the value of private pensions.

In December of 2008 many final salary pensions faced a combined deficit of nearly £200 billion and the Pensions Protection Fund had to step in and rescue several schemes. Only time will tell what the Government’s plans for pensions will bring.