Although the Treasury has stated that there will be no announcement until the Budget on 16 March, speculation has been rife over a pension ISA or a low flat rate of tax relief for all.

Possible changes to the pensions taxation system were outlined in a consultation launched by the Treasury last summer, following the last Budget.

Royal London director of policy Steve Webb, who was Pensions Minister in the Coalition Government until he lost his seat as MP last May, has hit out at the proposals.

He said: “The March Budget could be the biggest example of Daylight Robbery since the days of Dick Turpin. A pension ISA steals billions of pounds in tax revenues from the next generation who will need the money to fund the public services of an ageing society.

“And if the Chancellor opts for a low flat-rate of tax relief, he will be stealing billions of pounds today from the support we give to hard-pressed savers. We need a reform which helps savers and offers simplification and stability, such as a generous flat rate of up-front relief combined with the abolition of the lifetime limit on pension saving. Anything else would be a huge missed opportunity”.

A report by Royal London looks at other potential tinkering and the report sets out some of the Chancellor’s options for continuing with recent practice of making further detailed changes to the limits and structure of tax relief without fundamental reform.

The report stated: “Royal London argues that this would be the ‘worst of all worlds’ creating yet more uncertainty and complexity and missing a once-in-a-generation chance to simplify the system.”