The Association of British Insurers (ABI) and the Investment Management Association (IMA) have written to the Government asking for clarification on personal accounts limits in the Pensions Bill.
Conflicting statements have been made by Pensions Minister James Purnell and Lord MacKenzie, over annual limits for personal accounts schemes.
Speaking at the ABI Chairman’s dinner on 4 June, Purnell said: “We are determined that personal accounts will complement rather than replace existing employer schemes.
“That’s why we put in an annual limit for individuals in the personal accounts scheme of £3,600. And that’s why we’ve said there will be no transfers to and from existing schemes to personal accounts.”
However, Purnell this contradicts a statement made by Lord MacKenzie in the House of Lords on 3 June when he said:
“We have not put the amount of the contribution limit in the Bill, because we want to allow the annual contribution to operate flexibly,” MacKenzie said.
“The wide enabling powers will allow for the higher contribution limit in the first year of the scheme’s operation and for a lifetime lump-sum contribution to run alongside the annual contribution limit. We need to consider whether to introduce this additional complexity when the scheme is introduced or wait for the review of the contribution limit in 2017.”
Both the ABI and IMA believe a £3,600 cap on personal accounts would be the most appropriate, and say a rolling or flexible cap could undermine the private pensions industry.
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