Pensioners forced to ‘gamble’ on size of tax-free allowance

In this case they can apply for a “transitional tax-free amount certificate”. This is designed to show their “true” position, by adding up all the tax-free cash they have ever taken.

However, pension experts have warned that the calculations behind this are so complicated that it will not be clear to savers whether this method will show a higher or lower remaining allowance. Once you apply for the certificate, you must follow that figure, even if it is lower.

Andrew Tully, of the financial platform Nucleus Financial, said the process would be hugely complex for individuals trying to follow the new rules.

“Asking people to choose whether to go down a one-way street without being able to reverse back to the ‘normal’ position feels a very poor customer outcome,” he said.

“It is asking people to gamble on which route will be best, and many, especially those without advisers, will end up paying more tax than they should.”

Last month The Telegraph revealed that savers may be able to double the amount they can take tax-free from pensions because of another loophole created under incoming rule changes.

The Finance Bill, which is currently passing through Parliament, could allow a wealthy saver to take a 25pc tax-free lump sum from both a pension scheme registered in Britain, as well as money saved in a qualifying recognised overseas pension scheme, also known as “QROPS’’.

Experts have warned that it could trigger a wave of transfers into foreign pension schemes, even though the sector has historically been rife with scams.

A spokesman for HMRC said: “No one will receive less tax-free cash from their pension than under the lifetime allowance.

“The vast majority of individuals will not need a transitional tax-free amount certificate.”