The company said it was submitting a “highly critical response” to the Treasury about plans to cut the Money Purchase Annual Allowance from £10,000 a year to £4,000. A consultation closes on 15 February.

Hargreaves wants the Treasury to drop the move entirely and leave the Money Purchase Annual Allowance at £10,000.

Tom McPhail, HL head of retirement policy, said the Treasury rationale for the existence of the MPAA and for extending it, is that investors could draw money out of a pension, and then subsequently reinvest it in a new pension, thereby scooping up extra tax relief.

But the amount of tax relief the Treasury predicts it will save is ‘negligible’, he said, citing figures of £70 million a year out of an annual bill of £48 billion – or less than 0.15% of the total annual pension tax relief.

Mr McPhail said over 500,000 investors, mainly in their 50s, have already used the pension freedoms to flexibly access their pension and so are immediately caught by this reduced allowance for future pension saving.

He said: “This proposal is symptomatic of a government that has lost sight of the importance of putting individuals first. It is the worst kind of policy-making: it inconveniences and disproportionately penalises millions of ordinary investors and its barely going to save the government any money.”

“We have searched hard for a solution to the questions posed by the Treasury; we have consulted with industry peers; we have looked at it from every possible angle and in the end our only answer to the Treasury is: ‘Just don’t do it’.”

John Moret, principal of MoretoSIPPs was also unimpressed with the policy.

In a recent column for sister website Sipps Professional, he said: “To me the proposal seems to be nothing more than another small swipe at pensions tax relief.

“I can understand that there was no appetite to revisit the broader pensions tax relief issues at this point – but I simply cannot comprehend why it is necessary to make a further change to a pensions taxation landscape which is already a minefield.”

Mr McPhail said: “Nationally we are trying to promote a culture of saving and investing for our future. With the decline of traditional final salary pensions, individuals have to take responsibility for their own retirement.

“It is up to the pensions industry, employers and the government to help them. This makes it all the more disappointing when you see the government proposing policies which undermine our ability to help investors achieve their goals.”