EveryInvestor reports that – ignoring differences in annuity rates or investment growth – the tax incentives for pension savers are worth 6.25 per cent for someone who pays the basic rate of tax.

The firm claims that it is for this reason that basic rate taxpayers do not save a significant amount of money in a pension fund, which is usually a correct decision if their employer is not matching their contributions.

Chris Gilchrist of the firm said: “The incentives for basic rate taxpayers are simply too low to motivate them to save in pension schemes.”

He adds that these concerns are not addressed by the pensions bill, which does not add to these incentives.

Donna Bradshaw, an independent financial advisor and financial planning strategist of IFG Financial Services reported that the pensions bill is attempting to please too many people, while noting that there is a “huge unfairness” in current pension saving in favour of wealthier consumers.

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