Pension tax raid could have 'consequences' for millions under Labour's retirement overhaul

This proposal is reportedly being considered as the Treasury looks for ways to fill the £22billion "black hole" in the public finances left by the last Government.

One of the measures under consideration is a flat rate of tax relief at 30p in the pound.

If introduced, higher-rate taxpayers would be slapped with a 10 per cent tax charge on their pension contributions.

Current projections suggest that this would slash the overall tax relief bill which has jumped to £48.7billion as of 2023.

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Dame Amanda broke down the likely impact on peoples' pension savings if Labour and Reeves carry out this tax raid.

She explained: "On pensions tax relief specifically, we would just caution that if you really want people to save for the long term, pensions are a long-term game.

"They are not something that you do something with today and then don’t have consequences in five, 10, 15, 20 years’ time.

"All we would say about anything that happens is that any Government thinks about long-term impacts of policies."

According to the pensions expert, the Government should take a proactive approach to ensure people save into retirement plans.

She cited the potential investment opportunities that come from auto-enrollment schemes.

"We think pensions have a big role to play in terms of protecting individuals," Dame Amanda added.

"If they are saving up, they are not reliant on the state in later life.”

Under the new Labour Government, Prime Minister Keir Starmer and Reeves have pledged to scrutinise the current state of the UK's pension system.

This may involve getting employees to contribute more to their workplace retirement plan.

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Earlier this month, Reeves confirmed she was looking into other country's pension schemes to see if the UK can adopt any of their attributes, notably from Canadian and Australian schemes.

She said: "The size of Canadian pension schemes means they can invest far more in productive assets like vital infrastructure than ours do.

"I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment. We’re already beginning to see schemes announce plans to invest.

"That’s a vote of confidence in our work to fix the foundations of the economy, rebuild Britain and make every part of our country better off."