THE chief executive of Royal London, Phil Loney, has backed calls for pensions tax relief to be limited for higher earners after the firm unveiled record new business figures.

The mutual, which employs 1,100 in Scotland, grew life and pensions business by 40 per cent to £6.7 billion on the industry standard measure in 2015, from £4.8bn the preceding year as it felt the benefit of other pension reforms.

Royal London has recorded a surge in new drawdown business, as customers plan to take advantage of the new freedom to tap into their pension pots from the age of 55.

The firm also achieved strong growth in sales of workplace pensions on the back of the requirement for businesses to enroll employees in schemes.

George Osborne is believed to be considering making further big changes in his Budget in March.

Mr Loney said he would support moves to limit the amount of relief provided for people who pay tax at higher rates, of up to 45 per cent.

“The critics of the perceived unfairness of the current system, where 75 per cent of tax relief goes to high and additional rate tax-payers, have won the intellectual argument,” said Mr Loney.

He added: “ We don’t think there is a case for removing tax relief for higher and additional tax payers altogether. There should be some incentives for all to save. That is why we have come down in favour of a flat rate at around 30 per cent.”

Mr Loney underlined his opposition to Treasury proposals to introduce ISA style pensions.

These would not offer people tax relief on contributions. However, the incomes people eventually receive from such plans would be tax exempt.

He said savers would lose the certainty provided by the current system of providing tax relief on contributions made onto schemes and increases in their value. They would need to believe that future generations of politicians will not renege on the deal and tax their savings when they come to withdraw them.

Mr Loney asked: “Hands up anyone who really believes that?”

Royal London increased the present value of new drawdown business premiums by 67 per cent to £1.3bn in 2015.

New group pensions business increased by 27 per cent annually to £2.8bn.

New individual pensions business rose 39 per cent, to £1.9bn.