Sir John Bourn, the head of the National Audit Office, has reported on the results of his examination of the Government’s estimates of the number of people who may be affected by the proposed introduction of a lifetime allowance for the amount of tax-privileged saving in a pension scheme.

The proposed allowance of £1.4 million would replace the current complex tax arrangements for pensions. These include the so-called earnings cap that has applied to anyone joining a pension scheme since 1989.

The Government estimated that around 5,000 people will have funds exceeding £1.4 million – the proposed allowance – at A-day (6 April 2005, the proposed date of implementation) and would therefore be affected if it were introduced.