Plans to place a ceiling on pension savings will result in excessive red tape and increase company expenditure, according to a study by PriceWaterhouse Coopers.

The Inland Revenue proposals aim to simplify pensions policy through the imposition of a cap of £1.4 million in pensions benefits accruable over a lifetime.

Employers claim that the new measures will increase costs for many businesses as they would be forced to offer compensation to top executives likely to be faced with lower pensions dividends.

Forum Response: Institute of Directors

Derek Brownlee, policy analyst at the IoD, told ePolitix.com: "At a time when other costs to business are going up - such as the additional National Insurance Contributions due to come into force in April - the impact of the proposed pension contribution limits may be to reducelevels of pension contributions overall, which is the opposite of what is needed.

"Not only do the proposed rules penalise pension contributions for high earners, they do little or nothing to address the root of the pensions crisis - that lower and middle income workers are not saving enough to get a decent pension in retirement."

Forum Response: National Association of Pension Funds

A spokesman for the NAPF told ePolitix.com: "Generally, executives that could exceed the £1.4m limit will find there will be re-negotiation of entitlement because it may not be appropriate to fund everything through pension rights and employers may look at other routes of remuneration.

"For those that already exceed the life-time limit, the government has suggested that those pension pots will be protected at the time of the implementation date."