A key unknown is to what degree these changes will help encourage more people back into employment.
The OBR acknowledges this is a complex task, judging temporary factors alongside more persistent influences. It believes there is significant uncertainty – so much so that it produced three different forecasts.
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Its central forecast is by 2027. Despite these pension tax changes, workforce participation will be around 250,000 lower than its pre-pandemic forecast.
Further change is likely to lie away from pensions taxation and more towards an understanding of why the number of people on long-term sick has substantially increased.
Andrew Tully is technical director at Canada Life
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