Investment provider and wealth manager Hargreaves Lansdown has called for the Lifetime Allowance to be scrapped as news emerges that it may be causing damage to the NHS by hitting GP numbers.

According to medical industry publication Pulse, Health Secretary Matt Hancock is lobbying Chancellor Philip Hammond to overhaul the pension treatment of GPs to stop so many retiring early.

There is strong evidence that many GPs are bringing forward their retirement once they have reached the Lifetime Allowance of just over £1m and can make no further contributions. This is leading to shortages of GPs who see little incentive to carry on working.

The Lifetime Allowance, which stood at £1.8m in 2011/12, has been steadily eroded and was reduced from £1.25m to £1m in 2016. It now stands at £1.03m.

Mr Hancock told Pulse: “The biggest concern I have raised with me is around the tax treatment of pensions. Of course tax is a matter for Treasury, but I’ve had conversations with the Chancellor about looking at the details of tax treatment of pensions because I understand the impact that that has.”

Mr Hancock declined to give Pulse further details of his conversations but admitted that the Government will not meet its target of recruiting 5,000 new GPs by 2020.

Bristol-based Hargreaves Lansdown says the Lifetime Allowance is having a detrimental effect on a number of professions and should be scrapped for everyone, not just GPs. It says the £40,000 annual allowance already provides a cap on pensions.

Tom McPhail, head of policy at HL, said it was understandable that doctors were hanging up their stethoscopes early as there was little incentive for further saving into a pension.

He said: “It is hardly surprising doctors are choosing to retire early, once they have maxed out on their pension accrual.

“The incentives to continue in work start to diminish once you know any further pension increases will be subject to punitive tax charges. The problem is the Treasury has squeezed down so hard on pension allowances that increasing numbers of mid-to-higher earners with long service in the public sector are going to find themselves in the same boat.

“However the answer doesn’t lie in carving out some special exemption for GPs. The whole pension tax system needs an overhaul, to the benefit of all workers, not just GPs.

“The Lifetime Allowance limit of £1,030,000 is causing particular issues and serves no meaningful purpose now that the Annual Allowance has been brought down to £40,000. It penalises savers whose investments perform well, and should be abolished.”

Steven Cameron, pensions director at Aegon said: “We welcome the discussions taking place between the Health Secretary and the Treasury about relaxing the pension tax relief limits for GPs. It’s bizarre that some GPs say they’re being forced into early retirement to escape this pensions tax penalty.

“But it’s not just GPs who are affected. These discussions really do need to look more broadly at the impact pensions limits are having on a range of professions. Changing the pension tax relief limits just for GPs would  further complicate an already complex tax system and create an unlevel playing field for pension savers in other professions."

“We’d urge the Government to reverse previous cuts in the lifetime allowance, which stood at £1.8 million in 2012 or ideally scrap it altogether. We should be encouraging people to save more for longer lifespans in retirement, not forcing them into early retirement to escape a tax bill."

• Editor's note: story updated 10.25 am to add Steve Cameron comment