Advisers have called for the money purchase annual allowance to be reformed amid the Covid-19 crisis.

Eight out of 10 believe now is the time for the MPAA to be changed, according to a new survey by AJ Bell.

Forty per cent want the MPAA to be scrapped altogether.

Just under a third want the MPAA to be increased from £4,000 back to £10,000, and 9 per cent support temporarily suspending the annual allowance cut during the current crisis.

AJ Bell senior analyst Tom Selby says: “Even before Covid-19 hit, the MPAA felt like an unfair punishment for savers whose only crime was accessing taxable income from their pension pot.

“During this crisis many more over-55s will be facing salary cuts or joblessness, while others will need to use their savings to help loved ones struggling to make ends meet.

“In such an environment, hitting people with a 90 per cent annual allowance cut for taking even £1 of taxable income from their pension feels deeply unjust.”

Freedom of Information Act requests show the government appears unclear on the extent of pensions “recycling” it has used to justify cutting the MPAA, which was dropped from £10,000 to £4,000 in the 2016 Autumn Statement.

The MPAA limits defined contribution savers’ withdrawals from their pot when they are also making contributions, aiming to stop them benefiting from double tax relief.

Selby adds: “While there are various easements to the MPAA the Government could consider to help hard-pressed savers, the simplest would be to scrap it altogether.

“This could then mark the beginning of a radical pensions reform agenda, with the aim of simplifying the unnecessarily complex tax rules savers have to navigate and encouraging more people to save for their financial future.”