Tax-relief restrictions should be scrapped and the government must issue more long-dated and index-linked gilts, the National Association of Pension Funds (NAPF) says.
The trade body has put forward proposals to the chancellor of the exchequer ahead of next month's Budget.
The NAPF's budget submission - published today - highlighted two key proposals for the government: to abandon its "complex and costly" proposals on the tax treatment of pensions; and to increase the supply of long-dated and index-linked gilts.
The NAPF warned the government's tax regime would not just affect the top 1% of earners - but could in fact hit those earning between £40,000 and £80,000 a year.
It used case studies to illustrate how many employers could be caught for random and arbitrary reasons, such as receiving performance bonuses, relocation packages and redundancy payments.
It also warned that the government's tax regime is likely to disengage senior company decision makers from pensions, which could further undermine pension provision across the income scale if, ultimately, schemes close.
Research from the NAPF also suggested the government's proposals as they stand would almost certainly not result in the projected yield of £3.1bn - but more like between £900m and £1.5bn.
As a solution, the NAPF has proposed reducing the annual allowance for tax-favoured pension contributions from £245,000 to a range between £45,000 and £60,000.
It says this would raise much-needed additional tax revenues while still enabling a member to save up to the lifetime allowance of £1.75m.
The proposal also reiterates the NAPF's call for increased issuance of long-date index linked gilts.
NAPF chief executive Joanne Segars says: "Our simpler approach to pensions taxation will avoid the arbitrary and unfair effects of the government's proposals - too many people outside the government's target income group are at risk of facing high tax bills just for saving in a pension scheme.
"The government should also support workplace provision by skewing gilt issuance to the long and index-linked end of the spectrum."
NAPF chairman Lindsay Tomlinson reiterated calls for the government's last budget of this parliament to be a budget for pensions.
Tomlinson says: "The rapid decline in defined benefit provision is not just a future problem. It is actually having very important investment consequences which are immediate and which are likely to be deeply damaging to the UK economy.
"And even worse, although people are not happy about the symptoms that they recognise, no-one seems to see through to the underlying condition, let alone to be taking any mitigating action."
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