Pensions ceiling plan may go

SPECULATION is mounting that the Government may cave in over controversial plans to impose a £1.4m lifetime limit on pension savings.

Ferocious protests from business are believed to have prompted a rethink at the Treasury. Senior industrialists say there was 'surprise' within Government at the level of opposition from employers.

Critics hope the limit will either be lifted or scrapped.

Richard Greenhalgh, chairman of the CBI pensions strategy group and of Unilever UK, said: 'The Government should get rid of the cap altogether. They have been listening more to business and I am hopeful they will abolish it.'

The Treasury suggested a mere 5,000 high-rollers would be hit by the £1.4m ceiling. But independent actuaries Mercer Consultants warn it could affect up to 600,000 people over the next 15 years.

Experts say anyone with earnings of £100,000 and a maximum pension entitlement of around £70,000 could bump up against the ceiling.

The Government is expected to release further detail this autumn on the plans, first aired in a pensions green paper last year.

Anyone who breaches the barrier faces a tax charge of 60% on amounts over the ceiling.

Francis Fernandes, of actuary Lane Clark & Peacock, said: 'Those at mid-management are likely to be hit as well as very high earners.' Opponents also fear that public sector schemes may be granted a special exemption, benefiting highly-paid Government workers. The Inland Revenue said all 'tax privileged' schemes would be covered by the rules.

Separately, the Pensions Policy Institute said raising the State Pension Age should be 'kept as a live policy issue'. The think-tank said improvements in longevity suggest a 'significant hike' in the State pension age is 'overdue'.