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Brokers call for lifetime cap on pension contributions

PENSION brokers said Finance Minister Michael Noonan should put a cap on pension contributions over a person's lifetime but scrap plans for a €60,000 cap on annual contributions.

This would prevent wealthy people from building up giant pension pots but allow people who have stopped paying into their pensions for a few years to catch up later.

"Pension savers should be able to fund for their pension as they see fit and when it is affordable, and age should not determine a contribution amount," said Irish Brokers' Association (IBA) chief executive Ciaran Phelan.

"For example, many self-employed people have unpredictable earning patterns and should be able to adjust contributions and enjoy whatever tax breaks are available in the knowledge that there is no extra cost to the Exchequer over the term of the retirement plan."

REDUCED

Contribution caps could also discriminate against women whose earnings were reduced or eliminated due to mater- nity leave and childcare, he added.

The IBA, which has 5,000 members who together sell nine out of 10 private pensions in this country, said abolition of annual contribution limits and their replacement with a lifetime limit would finally create equity between defined benefit and contribution pensions.

The IBA added that Mr Noonan should extend early access to pension funds across all types of privately funded pension schemes.

Amid reports that Mr Noonan might tap private pensions once again in tomorrow's Budget, the IBA repeated its opposition to the pension levy, which it described as "totally inequitable".

Mr Phelan said the rules for defined contribution pensions needed to be changed if a cap was introduced.

Therefore, the capitalised value of a pension of €60,000 should be €2m, he added.

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