We think this is a very worrying development, as it suggests that a Labour Government intends to retain the limits they introduced indefinitely.

Many of us remember how the old ‘pensions cap’ was first introduced at £60,000 and it was said at the time that the impact would be small.

How wrong that was! £1.8m today only provides an indexed linked pension from 60 of perhaps £60,000 a year. Erode that with eight years’ inflation at an average of, say 3% a year, and that means that a £1.8m pension pot in 2016 will provide a pension of around £47,000 a year in today’s monetary values. If inflation averages at 5% a year, the effective value falls to £40k a year. All very depressing.

Also, what about those who currently have close to the lifetime allowance and are intending to start taking benefits in, say 2014. Will we, as their IFA be charged with finding an investment that does not grow, as if the pension pot exceeds £1.8m, 55% will go as a tax charge?

A further consequence of this is that the Trivialisation limit (which means that a pension policy holder can take all their benefits in cash as a lump sum) will be £18,000 from 6 April 2010 until 5 April 2016. This will mean that many small funds will have to be used to buy an annuity which will be pitiful.

Yet more "not-thought-through" decision-making from the Treasury!