Independent Financial Advisors (IFAs) are warning that reductions in tax relief will reduce fund flows into SIPP and SSAS wrappers.

New research from Investec Bank found that 63 per cent of IFAs warned that the new tax legislation, introduced in April, has negatively impacted contributions into personal pension funds.

The research also found that 20 per cent of pension-focussed IFAs have experienced increased demand for self invested personal pensions (SIPP) and small self-administered schemes (SSAS) in the last six months.

Of these, a third said business had increased by more than 20 per cent, with one in ten having seen an increase of more than 30 per cent.

However, the news is a further blow to savers, after the retirement income specialist MGM Advantage published a report revealing that millions of Britons do not expect to rely on a pension for income in retirement.

Investec chose to comment on the increased demand for SIPP and SSAS investments, rather than the misgivings of the IFAs.

Lionel Ross of Investec, said, 'Investors appear to be looking at SIPP and SSAS wrappers as an effective way to manage their pension investments in a low base rate environment while equities remain volatile.'

'More wrappers are migrating on to the UK wrap platform market, offering an even wider range of assets', he added.