An expected tax raid by Phillip Hammond in the Budget will widen the gap between the retirement funds of public and private sector workers, a report has warned.

Analysis for the Telegraph found stripping back tax relief on money saved into pensions would hit private sector workers significantly harder than their public sector equivalents, who already enjoy far more generous arrangements.

At present workers receive tax relief on pension contributions at their marginal rate (20 per cent for basic rate taxpayers and 40 per cent for higher rate payers), but the Chancellor is said to be planning to reduce this to help fund the NHS.

The cuts are most likely to be targeted at higher earners who receive the most tax relief on pensions.

If pension tax relief is limited the analysis by the Taxpayers' Alliance found a private sector worker earning £72,000 would subsequently have to pay around a fifth more in increased tax than their public sector counterparts to build up equivalent pension.