HMRC urged not to be tempted to use pension tax breaks as a 'CASH COW'

The huge amount is made up of £24 billion in occupational pension scheme tax relief and £16.9 billion in national insurance relief on employer contributions.

Royal London director of policy Steve Webb said the figure could be as high as £55 billion, once other forms of relief, such as contributions to personal pensions, are included.

The cost will rise as auto-enrolment workplace pension contributions increase and 18-year-olds are included in the Government-backed scheme for the first time. 

Webb warned that the Treasury will have its eyes on the rising cost of tax relief: “My worry is that it will be tempted to use pension tax breaks as a ‘cash cow’, useful for dipping into whenever it is short of money.”

Tom Selby, senior analyst at AJ Bell, warned against further tinkering with pension tax breaks, which have seen six changes since 2010: “Complexity and constant shifting of the goalposts puts people off long-term saving.”