Pension savers have been warned that they could end up with huge tax bills on their protected cash if they signed up for their employer’s death in service benefits.

Giving the piece of advice an expert said that owing to the way some employers treat life insurance protected cash could be in breach of tax laws and investors should, as such, consider taking out their own policy.

The lifetime allowance (LTA) was introduced by the government on 6 April, 2006 and it created an upper limit on total pension contributions beyond which they are heavily taxed.

Pension cash that is accumulated before the date and is in excess of the LTA may then be protected.

However, there is a regulation preventing the savers from making an additional pension contribution.

The expert said there was concern for people who have protected their pension savings falling foul of the rules when they join death in service life insurance schemes.