PENSION SCHEMES EARNINGS CAP

The maximum level of earnings from which tax approved occupational
and personal pension provision may be made is to go up from #87,600
to #90,600 the Chancellor announced today. The new figure applies
from 6 April 1999.

DETAILS

1. The Finance Act 1989 placed a limit on the level of earnings from
which pension provision may be made under tax-approved pension
schemes. The cap was originally set at #60,000 and is automatically
increased annually in line with retail prices, unless Parliament
determines otherwise. Its main effect is to set a ceiling on the
contributions that can be paid into, and the benefits that can be
paid by, tax-approved pension schemes, in respect of people to whom
the cap applies.

2. The increase announced today is in line with the statutory
indexation provisions based on the increase in the Retail Prices
Index of 3.2 per cent in the year to September 1998, rounded up to
the next multiple of #600.

3. The cap generally applies to people who:

- contribute to a personal pension scheme;

- joined an occupational pension scheme set up since 14 March
1989;

- joined any occupational pension scheme from 1 June 1989.

INLAND REVENUE PRESS OFFICE
Media enquiries to: 0171 438 6692/6706/7327
(Out of hours: 0860 359544)

Non-media enquiries to: 0171 438 6420/6425
(Office hours only)

Inland Revenue information is on the Internet:
www.inlandrevenue.gov.uk

# = pounds sterling