Osborne could target pension contributions

The amount you can put into your retirement pot could be cut in the Budget, a pension expert has warned.

The annual pension allowance was slashed from £255,000 to £50,000 last April, but could be cut further. Tom McPhail of Hargreaves Lansdown said cutting the amount to, say, £40,000 a year, would be attractive to the Treasury as it would be simple to do.

"However it would also generate no more than a few hundred million at most," he said. "It would also have a negative effect on confidence in the pension system."

Mr McPhail has called on the Chancellor to leave pensions alone in the Budget on 21 March. "The Government should resist the temptation to treat pensions like an ATM," he said. "What we need is a period of stability. Political tinkering undermines people's trust in pensions and people's willingness to save for the long term."

Auto-enrolment starts later this year, when many firms will be forced to start pension schemes for workers.