Senior police officers could retire early if the Chancellor cuts the pension tax-free lump sum, it has been warned.

The amount savers can withdraw from their pension without paying income tax could be cut to £100,000 under plans being considered by the Treasury.

However experts said the move could drive public sector workers, including senior police, to leave the workforce to save thousands of pounds in retirement.

It comes as the police is already facing a major staffing crisis due to recruitment struggles as well as years of funding cuts.

The Telegraph revealed on Tuesday that the Treasury asked a leading pension company to assess the impact of capping savers’ tax-free withdrawals at £100,000 down from the current limit of £268,275.

Most savers can take 25pc of their pot as tax-free cash from the age of 55, rising to 57 in April 2028.

However, one police officer, who asked to remain anonymous, told The Telegraph: “Many officers are worried and have contributed large sums of money for many years and planned financially on the basis of the existing rules.”

He said that a cap to the tax-free lump sum would force many senior officers to “retire immediately” when the force is already struggling with a dearth of experienced staff.

Former pensions minister Sir Steve Webb, now of consultancy LCP, said: “Changes to limits on tax-free lump sums would be likely to affect long-serving public servants including those in the police.

“If the Chancellor announced a future cap on tax-free cash, there would be a risk that this could trigger early retirements unless transitional protection was built in for those who had already built up significant rights to a lump sum.”

The police has a number of different pension schemes however under the 2006 scheme officers can collect a tax-free lump sum worth four times their annual pension.

As a result experienced officers expecting a pension of more than £25,000 a year would be hit by the £100,000 limit.

Tom McPhail, director of public affairs at financial consultancy The Lang Cat, said the loss of experienced officers was a “very real risk”.

He said: “I have had police officers contacting me to discuss whether they should retire early ahead of the Budget.

“If the Government changes the rules with immediate effect at the end of the month, that would be deeply unfair to millions of savers approaching retirement who have built their plans around the current rules.

“On the other hand, if they delay implementation, they’ll just encourage people to retire early ahead of the rule change. This is the problem with making up pension rules based on short-term fiscal needs, rather than on a long-term plan to help us save for retirement.”

Budget cuts during austerity led to the loss of around 20,000 policy officers between 2010 and 2019. A record 9,200 officers quit last year, according to figures from the Police Federation’s annual survey.

Meanwhile, Metropolitan Police Commissioner Sir Mark Rowley warned in the summer that the force is heading for its lowest staffing levels in a decade.

There are currently just 330 officers per 100,000 Londoners, expected to drop to 310 officers next year.

The Government has previously said it does not comment on “speculation around tax changes outside of fiscal events”.