Insiders say that Government officials admitted last week to being rattled by the scale of the fury caused by Labour's decision to slash winter fuel payments. According to a Treasury source, ministers 'hadn't factored in just how angry people would be'.

Faced with a furious army of pensioners, industry insiders expect the Chancellor to be more alert to the strong emotions that come from tinkering with people's retirements.

But that won't stop Rachel Reeves from touching pensions entirely. The consensus among the pensions industry is that they are too rich to leave untouched in the first Labour Budget. Half a dozen of Britain's leading pension experts who are in regular talks with Government and Treasury officials ahead of the Budget all agree – pensions are in the crosshairs.

But although rumours are running wild that the Chancellor could target pensions tax relief, a number of industry insiders in the know tell us that such a move is looking increasingly unlikely.

They tell us that the complexity involved would make it prohibitively complicated, raise less money for the Treasury than it might appear – and simply would not be worth it for the fury it would create.

Wealth investigates why experts think pensions tax relief may live to see another day, and what could face the axe instead.

How does pensions tax relief work?

Currently, you receive tax relief on any money you contribute into a pension at your marginal rate of income tax. This means, for example, that a basic-rate taxpayer gets 20 per cent tax relief on any money that goes into their pension, a higher-rate taxpayer receives 40 per cent and an additional-rate taxpayer 45 per cent.

The total cost of tax relief to the Treasury last year was £48.7 billion – so you can see why some believe it's an obvious target for a Chancellor looking to save cash.

The simplest way to water-down tax relief would be to introduce a flat rate for all. Reeves has indicated she would consider a flat rate of relief at 30 per cent. That would mean that higher- and additional-rate taxpayers would receive less. But to raise substantial amounts of cash, it would need to be set at 25 per cent or as low as 20 per cent, experts say.

Think-tank Tax Policy Associates lists a watering-down of pensions tax relief as the single most likely tax target in next month's Budget, while the Institute of Fiscal Studies estimates a move to a flat rate could raise up to £15 billion a year.

Dan Neidle, founder of Tax Policy Associates, says: 'I'd say this is streets ahead of all other tax-raising candidates given the large amounts that can be raised, and the ease of implementation.'

Why changes to tax relief may not happen

But ask any pensions expert worth their salt and they will tell you that a flat rate of pensions tax relief would be far too complicated to implement.

Tom Selby, director of public policy at stockbroker AJ Bell, says: 'It's a political and practical nightmare.' Lizzy Holliday, director of public affairs and policy at workplace pension firm NOW: Pensions, agrees: 'There would be so many unintended consequences.'

A flat rate of tax relief would be easy to apply to defined contributions paid into by most private sector workers.

But for public sector workers it would be much more complicated – and could land them with income tax increases. That is because these workers are promised a certain income in retirement based on their salary and the length of their service. The Government has to honour this promise.

But if these workers receive less every month in pension tax relief, that will create a shortfall in the amount saved towards their pensions every year.

Pension industry leaders we have spoken to agree that the only way to bridge the gap between the amount saved and the amount promised would be for workers to pay more income tax during their working lives.

Millions of doctors, teachers, nurses and police officers would see a fall in their take-home pay as a result. These are the same workers that Labour has so desperately thrown money at through pay rises in recent weeks. The political capital Sir Keir Starmer and Rachel Reeves have won thanks to their expensive and generous pay deals could be lost by such a move.

Selby says: 'We are talking about levying a huge tax charge on millions of workers. I can't see a world where that wouldn't lead to walkouts and strikes from those in the NHS, the police force and teachers, especially.'

Neidle admits this is a big 'catch' and would complicate any reform.

Steve Webb, a former pensions minister and now partner at consultancy LCP, agrees: 'Any change to pension tax relief would take years to implement so the Government would not see any savings for a long time. Public sector workers is the group that the Government obviously cares about and they are the workers that would be hit by any reform.'

One option would be for Reeves to exclude public sector pensions. But that would defeat the point – the majority of the money the Government stands to save by cutting tax relief would come from the public sector, says Selby.

Public sector pensions already have a reputation for providing a far more generous income in retirement than private sector workers can dream of. Any further special treatment would simply serve to widen this gulf.

One source who until recently worked on policy at the Department for Work and Pensions says they would be shocked to see any radical changes to tax relief without fully consulting the industry.

However, if you are a higher- or additional-rate taxpayer and are still concerned about the outlook for tax relief and other allowances, one option is to make the most of them now ahead of any potential changes. But it is worth being sure that acting now would make sense to your own circumstances whether or not the Chancellor makes changes to pensions in the Budget – so you don't suffer remorse if she does not go ahead.

What else could she do?

There are still plenty of other reliefs that experts say would be far easier for Reeves to go after.

One frontrunner is making pension pots liable to inheritance tax – a change experts say could be brought in overnight. Steven Cameron, of pensions firm Aegon, says one option would be to say the first £100,000 of pension savings is free from inheritance tax but anything above this would trigger a 40 per cent tax bill.

Cutting the 25 per cent tax-free pensions lump sum could also be on the cards. The tax-free cash is one of the most appealing features of saving into a private pension. Currently, anyone over the age of 55 can cash out the first 25 per cent of their pot without incurring any tax liabilities.

Left-wing think-tank the Fabian Society says the Government could raise large amounts of revenue by capping the amount you can take out, tax-free, at £100,000. However, experts say this wouldn't raise much money relative to the backlash it would spark.

Another change looking likely is a National Insurance levy on the contributions employers pay into workers' pensions. At the moment, employers pay National Insurance on just wages. Not charging employers National Insurance on pension contributions cost about £23.8 billion last year.

The Institute for Fiscal Studies says this 'should be reformed'.

Robert Salter, of tax firm Blick Rothenberg, says: 'This appears to me to be the most likely change.'

But he cautions that it could lead to employers cutting the amount they pay into their workers' pensions, or affect future pay rises.