Andy Bell, chief executive of investment platform and pension provider AJ Bell, has called on the Government to establish a fundamental review of pension rules.
Mr Bell said "It seems that the calls for changes to a variety of pension rules are becoming more frequent but we need a complete review to ensure they are fit for the modern world.
"The policy makers in Government must accept that change is needed when it gets to the stage where a future monarch suggests that we need to build and shape a system designed for the 21st century and not the 19th century. Pension simplification in 2006 was meant to create a system fit for the needs of today's savers and pensioners but the constant rules tinkering we have seen since 2006 has undermined confidence and dis-engaged millions.
"Auto-enrolment should repair some of the damage, but the Government needs to recognise that parts of the current system are not fit for purpose in the modern world and need to be changed."
{desktop}{/desktop}{mobile}{/mobile}
Mr Bell continued: "Over the next decade defined benefit pensions and guaranteed annuities are going to be unsustainable. This will result in a massive transfer of risk to individual savers. To encourage savers there must be meaningful incentives at the point of saving and both flexibility and security at the point when a pension is drawn."
As part of the review Mr Bell wants the government to:
• Recognise that the annual allowance is now low enough to limit savings to a reasonable and economically sustainable level and scrap the lifetime allowance to reflect this.
• Remove the doubts over the investment rules which govern pensions by publishing a permitted investment list.
• Consider the need for flexibility in the circumstances when individuals can access some or all of their tax free lump sum or pension before age 55, including rules governing ill-health pensions.
• Scrap the current flexible drawdown system and reform capped drawdown to reflect its use in the 21st century as an alternative to annuities. In particular removing the link between maximum drawdown limits and annuities that is an out-of-date relic of the launch of drawdown 18 years ago when drawdown could only be used to delay the annuity purchase.