A new report indicates that the actions of Gordon Brown effectively removed £300 billion from the UK's pensions savings funds.
Private client stockbroker Killik & Co calculates that the chancellor's decision to remove dividend tax credit from pensions was effectively "one of the causes of the pensions crisis".
While taxing share dividends in pension funds is often cited as removing £5 billion a year, this action also magnified the collapse of the UK stock market between 2000 and 2003, the report concludes.
"The removal of the tax credit without any prior consultation demonstrated the government's arrogance as well as its ignorance of the way that capital markets operate," explained Paul Killik, senior partner at Killik & Co.
"In taking this action, and reducing equity yields by 20 per cent, they altered the delicate balance between equities and other investments, most significantly the gilt market. In the years immediately after 1998 this was not a problem, as rising global stock markets hid the effect of the removal of the tax credit.
"But when markets fell from 2000 to 2003, and investors looked down for the 'safety net' of the yield, they found that it was 20 per cent lower and enormous damage to the savings industry and individual investors ensued."
The firm's research reveals that, firstly, the amount removed from pension funds has increased from £5 billion a year to around £8 billion.
While rising capital increases masked this change between 1998 and 2000, when the market started to slip Killik & Co argues that it fell further than would otherwise have been the case.
For a brief period in March 2003, at the low point of the market, the yield on ten-year gilts was lower than that on the FTSE 100 - the first time this had happened in 50 years.
If tax credits on dividends had not been removed, this same inflection point would have been reached at 4,100 not 3,287, Killik & Co argues.
"As most of the liquidity issues suffered by the life companies and the pension funds were triggered when the market fell through 4,000, this point would not have been reached had tax credits still been in place," the company states.
But once this point was reached, the regulator required funds to bolster their liquid assets by selling equities, which in turn drove the market down further, and meant funds had to sell more equities, and so on - the company adds.
This only stopped when equities' yields became worth more than gilts.
Killik & Co calculates the value of the market between 4,100 and 3,287 equates to about £300 billion.
Mr Killik concluded: "Gordon Brown likes reminding us that the British economy has performed better than any other G7 economy. Yet our stock market has performed significantly worse than any other western market. Since May 1997, the German market has outperformed ours by 19 per cent, the US has outperformed ours by 26 per cent and France has outperformed ours by 45 per cent.
"It is ironic that Gordon Brown appears to be trying to bury the recommendations of the Turner Review - which is the culmination of three years effort and analysis into helping solve some of the very real problems that the country faces in providing for its ageing population - when his actions in removing the dividend tax credit is one of the causes of the pensions crisis in the first place."