Legal & General (L&G) has attacked the government for changing the pensions regime during last month’s Budget.

Tim Breedon, chief executive at L&G, said the government’s plan to cut tax relief on pension contributions made by higher rate taxpayers would hinder saving and erode recent efforts to simplify the system.

L&G reported better than expected new life and pensions sales this morning of £382 million for the first three months of the year, up 3 per cent on the same period a year ago.

But Mr Breedon said in order to make savings attractive to people they must be kept simple.

“To make savings attractive to people you want simplicity not complexity. And you want stability, not change,” he said.

Mr Breedon said the proposed changes would simply give people another excuse not to save for their retirement.

He added: “We have greater confidence that the worst of the financial crisis is behind us. Credit spreads, generally, have narrowed considerably. And with this, the market expectation of future default rates has fallen.

“There are very large changes in the perception of risk that occurred in the last few weeks in the market. Credit spreads have narrowed to a level which we think is more consistent with the likely economic outlook. It’s not a very positive outlook but it’s nowhere near as negative as the deep financial woes that were being priced in.”

But Mr Breedon ruled out, for now, any reduction in L&G’s capital surplus — the financial buffer it retains to protect it against possible losses. He said this stood at £1.6 billion at the end of March — up from £1.5 billion on March 23 — and insisted he would need to see a clear indication that recovery was under way before relaxing that.

Shares of L&G, which have risen almost three-fold since early March, were down by almost 4 per cent in late morning trading.