The government is pressing ahead with controversial plans to reduce the money purchase annual allowance (MPAA) from £10,000 to £4,000, according to Spring Budget documents.
The cut, which will come into force on 20 March, was first proposed by the chancellor in last year's Autumn statement, and was heavily criticised during the consultation that ended in mid-February.
The Treasury predicts the policy will raise £65m for the 2017-2018 tax year, rising to £70m in each of the following four years.
The decision was met with disappointment by the pensions industry, after some were hoping it would be scrapped or least postponed.
Aegon head of pensions Kate Smith said: "Only two years on we're already seeing the pension freedoms unravelled, based on no evidence that people are deliberately trying to abuse the pension tax system.
"We expect few people will be aware of the risks they're running by continuing to make pension contributions, once they've begun accessing their savings. The approach is inconsistent with the government's policy of encouraging fuller working lives and will result in many more people inadvertently breaking this limit and having to curtail post age 55 pension contributions, possibly including having to turn down valuable employer contributions under auto-enrolment."
Prudential head of technical Les Cameron said he was concerned about the impact of the cut on ordinary savers:"The government is concerned about abuse of the tax system, however the proposed reduction to the MPAA may see many ordinary savers who have accessed their pensions caught by the new limit. Someone earning the national average income and who is a member of a good-quality workplace pension could easily be caught out."
Norton Rose Fulbright senior knowledge lawyer in the pensions team, Lesley Harrold, added: "Those who were hoping that the chancellor, Philip Hammond, would use the Spring Budget 2017 as an opportunity to postpone or scrap the reduction in the MPAA will be disappointed.
Hymans Robertson partner Chris Noon gave an example of how someone could be affected by the cut:
"Let's take the example of a 57-year-old earning £50,000 per annum full time and they've already taken advantage of the 25% tax free lump sum. They decide to reduce their hours to a three-day week bringing their earnings down to £30,000 and they decide to withdraw money from their pension to supplement their income.
"If we assume they have total contributions of 15% into their pension (a combination of theirs and their employer's contribution) that equates to £4,500. What this means is people will either be deterred from withdrawing from their pension or they'll stop saving into it."
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