Brown in rift over 'fat-cat' pensions

A SPLIT between Tony Blair and Gordon Brown over plans to cap pension savings for high-paid executives has delayed the announcement of a shake-up of the system.

The Treasury is strongly backing a proposal to limit the amount that can be saved in tax-efficient plans to £1.4m. But Downing Street wants the limit to be raised after the Prime Minister came under pressure from business leaders.

They protested it amounted to a 'soak the rich' policy that could force businesses out of Britain.

The Chancellor's aides say the move would affect only 5,000 top paid people, although some experts claim this could rise to 600,000 in a few years as the cap is set to rise in line with prices, not earnings.

It was hoped long-awaited pensions reforms, to streamline eight existing pensions tax regimes, would be in the Queen's Speech this month. They are not now expected until Brown's pre-Budget report, in December.

The policy was developed after reports that top directors had built up pension 'goldmines' while their staff faced cutbacks in funds. Any amount over the £1.4m limit would be taxed heavily.