Ahead of the Budget, the ABI has called on Chancellor Philip Hammond to end what it called ‘salami-slicing’ of cutting pensions tax relief.

The body said it was “ready to work with Government on any longer-term reforms” to avert “short-term chopping and changing.”

Since 2010 there have been six separate cuts to the annual and lifetime allowance alone.

Regular cuts in pension tax allowances since 2010 have seen the annual tax-free allowance reduced from £255,000 to £40,000, and reductions to the lifetime allowance.  

Dr Yvonne Braun, the ABI’s director of long-term savings and protection, said: “We must break the cycle of speculation, uncertainty and tinkering with pension tax relief that blights the UK pensions landscape.

“In recent years pensions has seen some tumultuous changes, including the implementation of the Freedom and Choice reforms and auto enrolment into workplace pensions, so savers deserve a period of stability.

“We recognise the Chancellor’s need to raise revenue, but the salami-slicing approach to pensions tax relief sends out the wrong message.

“Constant changes risk undermining people’s confidence and trust in long-term savings at the very point where auto-enrolment is bringing millions more into savings and contributions are rising to 8% next April.”

She added: “Rather than short-term chopping and changing, we would like to see meaningful discussion on sustainable long-term holistic reform in this area.

“We are willing to work with government towards a pensions tax relief system that is fair, sustainable and does not undermine consumers’ confidence in long-term savings.”