Osborne had been planning widespread pension changes, including reforming tax relief to a basic rate (20%), with tax-free withdrawals.
However the plans had received widespread industry criticism, with Hargreaves Lansdown arguing that an ISA style reform would "create the risk of a future Northern Rock style run on the pension system and the UK stock-market".
Treasury insiders have now confirmed that the government won't announce any chages to tax relief in the March Budget.
Speaking to The Times, a Treasury source said:
"He’s listened to what people have said and concluded that now isn’t the right time, with uncertainty in the global economy and reforms such as auto-enrolment still bedding in, to turn things on their head.
"It is also clear that employers wouldn’t welcome a wholesale change in the way they administer schemes. So he is not going to tear up the system of pension tax relief. There won’t be any changes to tax relief at all in the Budget."
However pension experts have described the move as "no more than a stay of execution".
Tom McPhail, Head of Retirement Policy at Hargreaves Lansdown, commented:
“The Chancellor is believed to favour the Pension ISA but the idea met with widespread resistance from employers, investors and the pensions industry. By contrast the flat rate scheme would be more workable but perhaps wouldn’t have met the Chancellor’s ambition for truly radical reform.
"With uncertainties over auto-enrolment and the EU referendum, it appears the Chancellor has decided to put his plans on hold. Investors should look on this as no more than a stay of execution though; with the amount of money involved, it would be optimistic to expect that the Chancellor will just leave pension tax relief untouched for the rest of this parliament.”
McPhail added that there is "still plenty of wriggle room for changes in the Budget".
It is believed that the Chancellor could still announce reductions to Annual and Lifetime Allowances, restrict salary sacrifice, or extend the Annual Allowance taper.
