Sometimes, reading a budget release or pre-budget announcement can be very tedious, and very long-winded. Sometimes this task can cause many smaller, seemingly incidental details to get lost in the smoke.

A re-reading of the recent pre-budget document has brought an interesting point regarding pensions to our attention. Since "A-day", when the pension rules were simplified, a cap has been placed on pensions, whereby there is a maximum amount of pension fund permitted prior to incurring a penalty 55% tax charge.

In the November release, this allowance, which has been increased each year, has been frozen at £1.8M from 2010/11 for five years, effectively limiting the benefit of large pensions. This may not hurt many people, because few have a pension of this size, but thinking through the change has led to another point, and that is that the trivial commutation rules state that if you have a pension fund of less than 1% of the lifetime allowance (the £1.8M), then you can take it as a lump sum. However, if the lifetime allowance gets frozen, so does the trivial level, which affects many more people.