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Trevor Matthews, chief executive officer at Friends Provident, has criticised the government's decision to curtail tax relief on pensions in last month's Budget, branding it a hindrance to the cultivation of a savings-focused society.

As such, Matthews has called for the financial services industry to work together and address what can be done to encourage people to save once again.

Matthews argues that the latest u-turn on tax relief for pensions was a poor decision that will hinder progress towards the 'save now, spend later' culture which must prevail.

He said: "Tax relief on contributions was a way of the government saying to everyone - and I mean everyone, irrespective of earnings - that 'saving for your pension is a good thing and we will encourage it'.

"Now that contract has been broken, and if it can be broken for one segment of savers now, it can be broken for others sometime later."

Furthermore, Matthews also believes that the financial services community must use the run up to 2012 wisely, as it is a landmark year that will see the advent of personal accounts along with other significant changes to pensions legislation.

Much of the groundwork should be laid in advance and Matthews is calling on the government to extend the current personal accounts proposals to include life cover.

For example, he believes the UK can build on the Australian life cover model, which sees a small weekly premium per person from the employer secure significant life cover for younger employees, which scales down as the employee gets older.

Matthews added: "The advent of personal accounts is a gold-plated opportunity for our industry to add value, but one which, if we are not careful, could be squandered.

"We have to ensure that all that is good about the current pension provision remains intact and is a starting point for future enhancements.

"And life cover should also be considered. People need it, yet it doesn't currently feature in the government's proposals for personal accounts.

"Personal accounts give us an opportunity to extend life cover cost effectively. We could do well to look at the Australian model."