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Stricter personal account limits for pensions
9 October 2008 14:26
Stricter contribution limits for pensions have been put in place on personal accounts by the government.
Government officials had intended to allow savers to make contributions of up to £10,000 in the first year - a much larger amount than other schemes.
Insurers were worried that this would encourage savers to transfer funds from their existing scheme into the new personal accounts being introduced in 2012.
Maggie Craig, director of life and savings at the Association of British Insurers, said that the announcement was good news, as a higher first year limit and the payment of lump sums into personal accounts would have potentially damaged the existing pensions market and the people who contribute to it.
The government has now reneged on the proposal, although it will review the situation in 2012.
The introduction of new personal accounts in 2012 could see many enrolled into a pension scheme for the first time, which could see employees take home up to four per cent less in earnings.
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