This is one of the key findings of a report published on Monday into the effects that government "tax grabs" have had on the value of privately-funded pensions. The most damaging of these tax grabs, argues the Taxpayers' Alliance (TPA), was Gordon Brown's decision to cancel Advanced Corporation Tax relief shortly after becoming Chancellor of the Exchequer in 1997. This reform prevented pension schemes from reclaiming tax on a company's profits at the rate of 20%.

According to the TPA, partly as a result of this tax change, the number of active members of private sector occupational schemes has fallen by 41% in the past 12 years, with an even greater fall in defined benefit scheme members. Were this trend to continue, there would be no active members of private sector occupational schemes in 12 years’ time.

However, while private pensions have been steadily eroded by what the TPA described as "political meddling and managerial incompetence on the part of inexperienced politicians," the report noted that the public sector pension system is flourishing. It concluded that there are now over 17,000 retired public sector employees with retirement benefits worth GBP1m each, while unfunded public sector pension liabilities are estimated to exceed GBP1tn, over 70% of GDP.

Some public sector organisations, including Parliament and the BBC, refused to release details of how many MP and BBC pensioners have received pension benefits exceeding GBP1m.

Terry Arthur, author of the report and a Fellow of the Institute of Actuaries, said: “Political management of the UK pensions system has failed to provide a decent retirement income for many people and has been a painful lesson in the limitations of government. The history of the state pension system has been littered with broken promises, while it is immediately apparent that the proposed NPSS (National Pension Savings Scheme) could lead to lawsuits on a massive scale. The possibility that contributions may prove to have been worthless because they end up disqualifying the individual from pension credits or other benefits is just the tip of the iceberg.”

Corin Taylor, Research Director at the TaxPayers’ Alliance, added: “The infamous tax raid on pension funds has been a major factor in the collapse of occupational pension provision in the private sector, while gold-plated public sector pensions have remained immune from necessary changes. It is not right for taxpayers to be subsidising million pound retirement benefits for the public sector elite while seeing the value of their own pensions plummet, or in many cases not having a pension at all.”