He said scrapping higher rate relief on pensions is highly unlikely because it would disproportionately hit public sector workers.

Sir Steve, a partner at LCP suggested a cap on tax-free cash is unlikely for similar reasons.

In a report by the pensions firm released today (mon), the most likely option was found to be a levy on employer pension contributions.

Excluding them currently from National Insurance costs the Treasury a £23.8 billion a year.

Creating a new rate of NI on employer contributions would raise a couple of billion pounds but would not hit paypackets, so would be less politically damaging than other options.

Sir Steve Webb said: “The Chancellor will be looking for relatively simple changes which can be introduced quickly and will raise large sums with least voter anger.

“Changes to taxes on business may fall within that category, and the large cost of exempting employer pension contributions from National Insurance Contributions will not have escaped the Chancellor’s attention.”

SEE MORE : 

Labour’s winter fuel axe backfires as pensioners find loophole to avoid ‘cruel’ cut

Rachel Reeves’ highly controversial winter fuel payment cut may save hundreds of millions of pounds less than planned, according to a new analysis.

Rachel Reeves tried to strike a more positive tone during a tumultuous Labour Party Conference. (Image: Getty)

The move, branded “cruel” by Rosie Duffield, who gave up the Labour whip this weekend, will see pensioners lose their winter fuel payment unless they receive Pension Credit or certain other means-tested benefits.

A new analysis seen by the Observer reveals the savings made by the cut may not reach £1.3 billion as planned.

The Chancellor has faced stiff criticism for the plan from within her own party, as well as from opposition voices in response to the move.

Rosie Duffield branded the winter fuel cut ‘cruel’. (Image: Getty)

As it stands, around 10.8 million people receive winter fuel payments. However, under the new plans, only 1.5 million will receive the support.

However, since the plan was announced there has been a surge in Pension Credit claims – 152 percent – meaning the number of recipients of winter fuel payments could be far higher than expected.

If more Brits successfully claim Pension Credit, that will mitigate the savings the Chancellor is hoping to make.

Angela Rayner, Sir Keir Starmer, and Rachel Reeves look on during Labour Party conference. (Image: Getty)

It’s a race against time for pensioners to make applications for Pension Credit before the deadline.

Current projections suggest there may be 158,000 more claims than expected before the late December cut-off. If that happens, it will cost the Treasury £246 million.

To make matters worse, because being on Pension Credit triggers other benefits, the total bill could be an eye-watering £700m.