Osborne has reforms up his sleeve

Instead, there was a consultation paper setting out a number of options, followed by months of speculation over which the government favoured.

The Association of British Insurers (ABI) has said it wanted a relief rate of between 25 and 30 per cent and appeared to have built a head of steam. It labelled this “matching” of contributions a “saver’s bonus”.

The Investment Association, on the other hand, was less explicit but appeared to back a similar system. My view at the time was this suggested a change was inevitable, yet the perception was allowed to develop that two more radical courses of action were more likely.

The first was an equalisation of tax relief, albeit at nowhere near a revenue neutral level – the discussed rate of 20 per cent would have been cheaper than the status quo. The second was a full-on pension Isa, which would have seen contributions taxed but made pensions in payment tax-exempt. This option would have increased the budget deficit by £5bn a year in the long term, the ABI said, while Hargreaves Lansdown’s Tom McPhail warned it could provoke a Northern Rock-style run on pensions.

Perhaps Mr McPhail is even more influential than we thought. The day after his warning the proposal was ruled out by an ‘ally’ of chancellor George Osborne.

The threat of a pension Isa should not be permanently ruled out

Trade body Association of Professional Financial Advisers did tell the government to leave tax relief alone, but one wonders whether it was individual advisers putting pressure on Conservative backbenchers that made a big difference. There is, of course, the small matter of the EU referendum and the chancellor’s ambitions to move next door in Downing Street to be considered as well.

The whole idea of a pension Isa may have been a case of the government giving itself wiggle room to reach its real aim of a more modest reform. If so, it backfired in terms of political intrigue.

Where are we now? I wonder if some advisers haven’t slightly underestimated just how disruptive a radical reform might have proved. A pension Isa might have required them to remake the case for long-term investing. The threat may not now be imminent, but it should not be permanently ruled out.

As for this week’s Budget, many commentators believe changes to lifetime or annual limits may still be on the cards. AJ Bell chief executive Andy Bell has suggested the government has lost £1.5bn in revenue because savers, worried about tax relief reform, used up allowances while they still could. It may want to claw this back.

It is sometimes overlooked that paring back the annual and lifetime limits and cutting reliefs represent a way of clamping down on the cost of senior public sector pensions without rewriting contracts and provoking strikes. The qualified success of auto-enrolment is putting more strains on the system and could yet increase the tax relief bill to unsupportable levels.

So what should advisers do? Well, the first reports of this ‘U-ish-turn’ have said the chancellor faces opposition from the pensions industry and the media. No one bothered mentioning pension investors. The criticism is that it has been vested interests, not real people, that prevailed. My view is that advisers must not let up in making the case for generous pension incentives, and must also tie that demand to their clients – including workplace clients.

Nonetheless, tax relief is clearly in play in the short and medium term, and arguably will be for as long as such practices exist.

John Lappin writes on industry issues at www.themoneydebate.co.uk