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Francis calls for lifetime maximum pension deal

The Government should take drastic action if it wants to encourage greater pension savings by replacing annual contribution limits with a lifetime maximum, according to ABI director general Mary Francis.

Speaking at a fringe meeting at the Labour Party&#39s ann-ual conference in Blackpool last week, Francis said the Government is too fixated with the idea that some people may attempt to manipulate the pension system and as a result it is not doing enough to make pensions work for ordinary people.

Francis told the meeting, which was also attended by Work and Pensions Secretary Andrew Smith, that the move could cut out a lot of the pension complexity.

Francis said: “I think it is an attractive idea and I think it is a simple idea which, if combined with ironing out some of the other complexities in the tax system, would be very attractive both for employees and employers in helping everyone to understand the system they were working in.

“I do not underestimate some of the difficulties. I know the Inland Revenue hates the idea of rules that some people may be able to bend to their advantage.

“One has to understand that for the Government it is a big step but it is a big problem.”

Richard Jacobs Pensions & Trustee Services director Richard Jacobs says: “Something has got to be done because pensions are in an absolute shambles at the moment. The idea of an annual contribution limit sounds an excellent solution but I cannot see the Government allowing it.

“Everything they have been doing over the last decade has been trying to limit the amount of money that can be saved a year.”

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