The Personal Accounts scheme is a "scandal waiting to happen" and places the pensions industry at risk of giving bad advice, Trevor Matthews says.
Speaking in Edinburgh last night, the chief executive of Friends Provident said it could destroy the future of pension provision and called on the Government to change its policy on means-tested benefits.
Thousands of individuals could end up paying into Personal Accounts and then find their savings disqualify them from a number of state benefits in old age, Matthews says.
"This is a scandal just waiting to happen," he said, "and it places our industry at potential risk of giving bad advice."
Matthews says it is vital to encourage people to invest in pensions and restore their confidence, but says the Government's current stance on means-testing works against these goals.
He also hit out at the latest Budget, saying the decision to curtail tax relief on large pension contributions was also working against pension savings in Britain.
"I have said before that tax relief on contributions was a tangible way of all governments saying to absolutely everyone, ‘saving for your pension is a good thing and we will encourage it'," he says.
"That unwritten contract was so important. It has now been broken for one segment of savers, meaning it can easily be broken for others sometime later."
Trevor Matthews was speaking at the Turcan Connell Conference in Edinburgh.
Finance industry working to stop fraud
Partner Insight: Cathi Harrison, director of para-sols and Apricity and Clare Farrell managing director at Northfield Wealth met in London recently to discuss how to stay on top of regulatory risk.
CEO labels whistle-blower as 'brave'
Adds up to £130m FUM
Our weekly heads-up for advisers