Pension tax treatment is "hard to justify" and could generate the necessary revenue for long-term care reform according to research.
A paper by Nuffield Health for the Institute of Fiscal Studies said the introduction of Dilnot's proposed care cap of £35,000 would cost government around £1.4 billion for elderly care alone.
Better-off pensioners could shoulder the costs with a reformation of the tax and benefit system.
The report has said: "Although it is probably desirable from the government's perspective to encourage individuals to save for a pension, it is questionable whether the current system does this in the most efficient way."
It argues if national insurance was implemented on employer's pension contributions, each 1p of NICs would raise £350 million a year.
The treatment of employer pension contributions in National Insurance is as "hard to justify", particularly when compared with employee contributions.
And while the current system allows up to £435,000 to be taken free of tax, the report claims scrapping "the overly generous" tax free lump sum for better-off pensioners could raise £2.5 billion a year.
Only £500 million could be saved by limiting the tax free lump sum to £42,475, the current income tax higher-rate threshold.
In addition, capital gains tax treatment upon death - was floated as a means to raise capital for funding social care.
The IFS said the current system "arguably favours older people", costing the exchequer £600 million a year. The report concluded this was a "significant distortion into the tax system which ought to be rectified. "
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