The National Audit Office says 10,000 people, twice the number estimated by the Treasury, will be caught by the lifetime limit but it has generally vindicated the Government's view that only a tiny minority of people will be affected.
The report found that around 10,000 people are likely to be hit by the controversial £1.4m lifetime limit rather than the Treasury's estimate of 5,000 although it finds this to be within a range of reasonable estimates based on the poor data available.
The findings are widely seen as a green light for the Treasury to push on with pension simplification in next week's Budget. Referring the figures to the NAO last December, Chancellor Gordon Brown had threatened to drop the entire programme if the Treasury was proven wrong.
The Treasury came under intense criticism from across the pension industry that its figures were too low. In December, Mercer HR Consulting said 120,000 uncapped scheme members would be hit by the £1.4m limit and overall 600,000 would be affected by 2020.
The Treasury says it will not comment on the outcome of the review until next Wednesday's Budget.
NAO spokesman Barry Lester says: “The task that we were asked to complete was very specific and drafted in an unusually narrow way. We have no opinion either way as to whether the Treasury should now proceed.”
Mercer senior research actuary Deborah Cooper says: “It is possible the figure of 120,000 is higher than was completely reasonable but the number is clearly larger than the Treasury was saying.”
Scottish Equitable pensions development director Stewart Ritchie says: “There were elements in the industry who quoted six-digit numbers without showing how they had arrived at them. There must be a few red faces around the industry today.
“But ultimately, whether it is 5,000 or 10,000, it is still a tiny proportion of the population and although it introduces complexity for them, for the vast majority, the simplification is attractive.”