UK - Consultants and accountants have accused the government of woefully underestimating the number of people affected by the proposed £1.4m pension savings cap.
The government said only 5000 people would be hit by the cap but accounting giant PricewaterhouseCoopers and Aon Consulting claim the true figure is at least 14 times greater.
PwC’s survey of 156 firms – a third of which belong to the FTSE100 – claims that 70,000 senior staff will be hit by the limit. But even this figure is dwarfed by Aon’s estimates, which put the number at 100,000.
Aon said that if the limit was only increased in line with inflation, the number of people affected would rise to 250,000 within the next 10 years.
Principal Paul McGlone said: “By restricting tax relief of pension benefits to £1.4m, the government is effectively imposing an additional tax on anyone likely to retire on a pension of more than £60,000 per annum.
“But like the earnings cap, which has failed to keep pace with earnings inflation since it was introduced in 1989, there is a danger that this new limit will impact on increasing numbers of people as time goes by.”
Treasury spokeswoman Ruth Kelly dismissed the PwC and Aon figures as incorrect.
She said: “The government stands by its estimate that around 5000 people could have a pension pot larger than the proposed £1.4m lifetime limit.
“It is simply wrong to assume, as these reports have, that everyone contributing to a pension is currently free to put as much as they like into their pensions.”
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