Would the chancellor just damage the incentive to save if he tinkers with pension tax relief at the Autumn Statement?

Steve Webb, director of policy at Royal London and former pensions minister, says Yes.

Some things in life are about more than the short term, and pensions planning is surely one of those things. But how can individuals, employers and the pensions industry plan for the future when the rules are changed on an almost annual basis?

Ahead of the Autumn Statement we are already seeing speculation on possible changes to pension tax relief, and we will see the same again in the run-up to the March Budget. It seems crazy that something so long-term is subject to twice-yearly uncertainty, building on a track record of constant tinkering.

The repeated “salami-slicing” of limits on pension tax relief has already led around 100,000 people to seek transitional protection from the various changes. If limits are now frozen, many more savers will be affected and put off saving. The best thing the chancellor could do in November is announce “no change” for the rest of this Parliament.

Gary Smith, associate director of financial planning at Tilney Bestinvest, says No.

Moderate tinkering to pension legislation would not necessarily destroy the incentive to save.

Even if the chancellor opted to introduce a flat rate of tax relief of 25 per cent, resulting in an immediate tax saving for HMRC, this would make pension saving more attractive to basic rate taxpayers who currently only receive 20 per cent tax relief on their pension contributions. The new limit could still prove an attractive incentive for higher rate and additional rate taxpayers to continue funding pensions.

Philip Hammond could also opt to retain the current tax relief system, but reduce the annual allowance to £20,000. This would still make pension saving attractive to all savers, as it is unlikely to impact basic rate taxpayers. Higher and additional rate taxpayers would still want to attain maximum tax relief, albeit on £20,000 gross per tax year.

It would require a quadruple attack of reducing tax relief, the annual and lifetime allowances, and adding taxes on death to destroy the incentive to save in pensions.