It currently spends almost £50bn per year subsidising contributions into pensions through tax relief. The government received several hundred responses to the consultation and is considering the options for reform.

On the issue of inheritance tax (IHT) and undrawn pension funds in drawdown pensions, the government will legislate to ensure a charge to IHT will not arise when a pension scheme member designates funds for drawdown but does not draw all of the funds before death. This will be backdated to apply to deaths on or after 6 April 2011 and will be enacted as law in Finance Bill 2016.

At the same time, it has confirmed that following the introduction of a single tier pension from 6 April 2016 the weekly pension payment for the full new State Pension will be £155.65 per week, which will take effect in April 2016. The government will increase the basic state pension by the triple lock for 2016-17, meaning a full basic state pension will rise to £119.30 a week, an increase of £3.35.

On auto enrolment pensions, there will be a delay to the next two scheduled increases in automatic enrolment minimum contribution rates by six months each, to align these changes with the start of the tax year. This will mean that the increases scheduled for October 2017 and 2018 will be pushed back to April 2018 and 2019 respectively, saving the Treasury over £800m in pensions tax relief.

Francois Barker, partner at Eversheds said: ‘Despite performing a U-turn on tax credits the Chancellor resisted announcing radical changes to pensions tax relief, for now. The outcome of the Treasury’s consultation on this will have a major impact on the future shape and direction of the pensions industry and the adequacy of retirement savings, so all eyes will be on the dispatch box next Spring.

‘The Chancellor did dip into the pensions pot, however, to help balance the books by announcing a delay of 6 months for the increases to the auto-enrolment minimum contribution rates originally scheduled for October 2017 and 2018 respectively. This is expected to save the Treasury over £800m in tax relief.’

The original consultation on potential changes to tax relief on pensions, Strengthening the incentive to save: a consultation on pensions tax relief, which closed on 30 September, is available here The Treasury is currently reviewing the feedback to the consultation.

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