One in four higher rate taxpayers do not contribute to pension schemes despite the allure of tax relief to help boost their retirement savings, research from Prudential has shown.

Some 21% said they couldn't afford to contribute to a pension scheme, while one in eight (13%) saw no point in saving for retirement.

A further 17% confessed they didn't know why they fail to save for pension. Some 43% said they had made alternative retirement arrangements, while 4% have existing SIPPs. A dogged 2% say they will never retire.

Matthew Stephens, Prudential's tax expert, said: 'Pension saving offers valuable tax reliefs to all workers and particularly to higher rate taxpayers. Basic rate 20% tax relief is available at source plus up to an extra 20% from HMRC for higher rate taxpayers. Turning down what is effectively free money simply does not make sense.

'It is worrying that so many higher rate taxpayers say they cannot afford to save into a pension despite earning healthy salaries. The good news is that it is never too late to take action on saving for retirement and we urge all workers to seek advice on long-term retirement planning.'

Figures from HMRC show that around 58% of the estimated 900,000 higher rate taxpayers in the UK contribute to defined contribution pension schemes, while another 15% are members of either non-contributory or defined benefit schemes.

The research showed that changes limiting annual tax-free pension contributions to £50,000 a year had not materially dented pension saving among higher earners. Just 8% said the change had put them off pension saving while 25% were unaware of the change.