George Osborne has said he will not formally respond until the March Budget about a consultation on the current pensions tax relief system but the FT has reported today that it is set to be overhauled.

Everyone would be taxed at the same rate, possibly 25%-35%, starting from around April 2017, suggested the report.

Martin Tilley, director of technical services at Dentons Pension Management, said: “My worry, as has been borne out in the past, is that whatever announcement we have will not fully address all of the complications caused by the change and the timescales for implementation will be both too short and under estimated in terms of complexity and costs.

“What we do need is clarity and unity in the way any change is presented and communicated and that this be in a positive rather than negative light.”

He said if the report today was correct it would be a “landmark announcement for pensions”.

He said: “It would appear the Government has been successful in scaring the pensions industry and the electorate that a flat rate “incentive” is probably the best outcome from those put on the table last July. The retention of the status quo was never a realistic option.

“As always the devil will be in the fine print, as there are obviously administrative complications to overcome in such a move. Particularly for employer contributions and those remaining defined benefit schemes. Treatment from a tax perspective of unfunded schemes will also need to be innovative.”

A Treasury spokesperson said: “The government launched a wide-ranging consultation on the system of pensions tax relief last summer. We have not decided on whether or how to reform the system and are considering all options, including retaining the current system. This consultation is now closed. We are considering the responses and will respond at the Budget.”

This story was updated with a Treasury comment at 2.30pm.