UK - Increasing and delaying the introduction of the lifetime savings cap has not appeased senior pensions professionals.
Chancellor Gordon Brown has raised the limit from £1.4m to £1.5m in line with inflation – reaching £1.8m by 2010 – and postponed the so-called A-Day by 12 months to April 6, 2006.
But industry experts say the limit will discourage pension provision, create further complexity and turn away some of the nation’s most highly skilled executives.
The National Association of Pension Funds said it did not want the cap, despite the Chancellor’s “slight reprieve”.
A spokesman said: “While we welcome simplification, we do not think there needs to be a lifetime limit when there are annual limits anyway.”He said those affected by the cap could be further discouraged from providing occupational pensions.
“Our concern is that it may make them less inclined to keep their workplace pension scheme if they are going to lose out as a result.”
Accounting giant Pricewater-houseCoopers warned the limit would create even greater complexity for senior executives.
Chief actuary Trevor Llanwarne said: “Many will face confusion about whether to maximise, minimise or keep funding at the same level before A-Day. They will have to address issues such as whether to stop pedalling or pedal harder in terms of the contributions they make, to ensure they are in the right place when the £1.5m cap barrier comes down.”
And an Institute of Directors’ spokesman said: “We remain unhappy at the annual lifetime limits on pension contributions which, over time, will catch more and more people. The limit sends out the wrong signal on pension saving.”
PricewaterhouseCoopers has published a diagnostic flow chart and reward strategy summary to help senior executives calculate how much they need to pay in contributions before A-Day.
The Pensions Regulator (TPR) has set out plans to use "new regulatory initiatives" with over 1,000 schemes as it aims to tighten its regulatory grip and boost member outcomes.
HM Revenue and Customs (HMRC) has announced it is delaying the provision of data that will enable pension schemes to confirm the guaranteed minimum pension (GMP) benefits to pay to members until the end of the year.
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