A new, easy-to-understand "savers' bonus" should be introduced to help encourage retirement saving, the Association of British Insurers (ABI) has proposed.
The ABI argues that the proposed bonus to top up people's pension payments should replace existing complex tax relief arrangements that currently benefit the wealthiest savers the most.
A savers' bonus based on a single rate of tax relief would help to encourage low and middle income earners to save into a pension, the ABI said.
Currently, basic rate taxpayers get only £1 of relief for every £4 they put in, while higher rate payers get a more generous £2 of relief for every £3 they put in.
But under the scheme being proposed by the ABI, all savers would get the same level of top-up into their pension pot, which the body said would also make it easier to understand.
It suggests that depending on where the proposed new single rate of tax relief was set, the bonus would top up payments made into a pension at a rate of £1 for every £2 they put in, or £1 for every £3 they put in.
Yvonne Braun, the ABI's director of long-term savings policy, said: "We believe that the new savers' bonus is easy for savers to understand, keeps the up-front incentives to save for individuals and employers, targets help more fairly between low and high earners and saves money."