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&#39Lifetime limit may discriminate against women&#39

Replacing the annual pension contribution limit with a single lifetime

limit could discriminate against women as they would get lower annuity

income than men because of their longer life expectancy, experts claim.

Pension experts are warning that a sex discrimination challenge is just one

problem facing the £1.4m lifetime contribution limit proposed in the

Inland Revenue&#39s pension taxation review announced alongside the Department

for Work and Pensions Green Paper last December.

The industry has given a cautious welcome to the Rev-enue&#39s proposals but

prov-iders and advisers are also concerned that the limit rel-ates to the

value of the fund at retirement and not the contributions into the fund,

forcing individuals to correctly predict investment performance over

decades or face a double tax hit of a third of the excess fund as well as

income tax on the excess.

Standard Life senior technical manager John Lawson says: “Growth of 4.5 per

cent above inflation would see a 40-year-old&#39s fund of £500,000 grow

to £1.2m in 20 years. People already at that level could see

themselves overshooting the limit if they carry on paying as they are now.”

Scottish Life head of pensions strategy Steve Bee says: “The fact that men

would be able to achieve a higher inc-ome in retirement could leave this

open to challenge. But this is part of a broader picture which sees the

switch from final-salary schemes to money-purchase schemes worsening the

position of women.”

Intelligent Pensions director Steve Patterson says: “The limit means that

some people will have to stop paying into their pension by virtue of good

investment performance.”

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