New research from A J Bell showed that someone who delayed contributing to a pension until age 40 could be restricted to saving £250,000 tax-free by age 65 because of the taper rules. Even if this grew by 5% a year, it would amount to a pot of £537,000. On today’s annuity rates, this would provide an inflation-linked income in retirement of around £18,000.

Investors can usually put up to £40,000 in a pension. However, those earning over £150,000 start to see their allowance ‘tapered’. This depends on their ‘adjusted income’ and ‘threshold income’. Adjusted income includes all taxable income and employer pension contributions. Threshold income is total taxable income and any salary sacrifice arrangements set up since 9 July 2015, less any personal pension contributions.

If someone’s adjusted income is above £150,000 and their threshold income is above £110,000, they will be affected by the taper. This means their annual pension allowance will be reduced by £1 for every £2 of adjusted income above £150,000.

For example, if their adjusted income was £160,000 for a given tax year their annual allowance would drop by £5,000 to £35,000.

Tom Selby, senior analyst at AJ Bell, said: “Doctors and NHS consultants aren’t the only people hit by the Government’s pernicious annual allowance taper – tens of thousands of private sector workers are having their ability to save severely restricted by this complex policy.

“In fact, the vast majority of people hit by the taper will be in the forgotten generation of people in their forties or fifties who missed out on the glory years of defined benefits and for whom automatic enrolment has arrived too late. Many will have little to no pension provision at all from their earlier careers, possibly because their wages were lower, their employer didn’t offer a scheme or they prioritised buying a house and raising a family.

“Whatever the reason, the taper acts as a monumental brake for people looking to make up for lost time saving for retirement.”

Selby called on the government to scrap the taper and consider whether the overall pension tax system is really fit for purpose. He added: “A move towards greater simplification – with an emphasis on encouraging higher levels of pension saving in the UK – could help cement the retirement revolution automatic enrolment has started.”