Skandia is urging HM Revenue & Customs to scrap the lifetime allowance on pension savings in an attempt to help more people save for retirement.
The Government is currently consulting on reducing the lifetime allowance from £1.8bn to £1.5bn.
It is also considering lowering the annual allowance from £245,000 to between £30,000 and £45,000 a year.
Skandia says if the proposed new annual allowance on pension contributions is going to work, pension tax relief has to become less restrictive.
Head of proposition marketing Colin Jelley says the new annual limit reduces the cost of pension tax relief enough so as to make a cap on the total value of a pension unnecessary
He says: “Any requirement to reduce expenditure on pension tax relief must be balanced by the equally important objective of encouraging people to save for their retirement.”
To prevent abuse of tax-free cash rules, he suggests this could be capped at £450,000 or 25 per cent of the current £1.8m lifetime allowance.
He also proposes allowing the new annual allowance to roll over for a period of three years to give people greater flexibility.
Jelley says: “The vast majority of people will not be able to make full use of even the capped annual allowance for most of their working life but they may be able to make up for this with contributions later when they have more excess income.”
Facts & Figures managing director Simon Webster says: “Any simplification has to be welcomed because the more straightforward pensions are, the better chance there is that Joe Public will engage in what is going on with them.”