Hargreaves Lansdown has offered some advice to chancellor Philip Hammond, proposing pension and Isa simplification to be included in next month's Autumn Statement.
According to the firm, which has written to HM Treasury, consumers could be helped to save and invest for their future if the government simplifies the rules for Isas and pensions, as well as targeting its top ups more effectively.
Last month Hargreaves Lansdown said it believes the government should abolish pension tax relief and replace it with a simple system of age-based top ups.
Hargreaves' recommendations to the Treasury reiterated this view and also said the government should abolish complex and punitive rules restricting pension savings of higher earners.
The Bristol-based firm also said it should consolidate multiple Isa regimes into one 'super-Isa' and cut the pension annual allowance to £20,000 a year.
Alongside this, retirement specialists at the firm think there should be a combined Isa and pension savings allowance of £80,000 a year for couples.
Hargreaves Lansdown also suggested retaining the Help to Buy Isa-style government top up for under-40s when buying a first home.
Tom McPhail, head of retirement policy at Hargreaves Lansdown said:“Policy initiatives such as auto-enrolment and the new Lifetime Isa are helping individuals to save and invest for their future, however there is still a lot more that can be done.
"Those who invest well and build even a half-decent sized pension pot are penalised by the lifetime allowance; higher earners are penalised by the annual allowance taper; meanwhile younger, lower earning workers tend to do worst out of the tax relief system.”
“With the impending launch of the Lifetime Isa, investors will have around half a dozen different tax privileged savings products, all with their own unique terms and thresholds, competing for attention.
"The Lifetime Isa is a good product for the right investors but there is now a real risk that more products will mean less overall savings.”
Mr McPhail said investors want a simple savings system which helps and rewards those who want to do the right thing.
"There are generous incentives available from the government but the rules are riddled with complexity and inconsistencies. Our proposals would mean a fairer system with more efficiently targeted incentives, which would help to engage younger workers with retirement saving.”
Chancellor Philip Hammond has said the Autumn Statement will take place on Wednesday 23 November.
Work and Pensions select committee member Steve McCabe proposed reforms linking pensions tax relief to age and income in a move that he said would promote inter-generational fairness.
Colin Rodger, director at Glasgow and Edinburgh based Alexander Sloan Financial Planning said: "Ideal world, yes it would be good to have a more simplified system but what needs to happen is to start with a clean sheet.
"Every change or simplification seems to be built on what has gone before so generally ends up being more complicated. Try working out the pension death benefit options for someone over the lifetime allowance. Frankly I shudder at the thought of more 'simplification.'"
