This is because of the outdated way the taxman calculates the value of salary-linked pensions. As DB pensions are not simply a pot of money, HM Revenue & Customs multiplies the annual income the scheme will pay out by 20.
This formula was devised before the lifetime allowance was introduced in 2006 and was based on annuity rates at the time.
Annuities are insurance products that can be bought with pension savings and guarantee an income rate until death.
But rates have plummeted in recent years so savers can no longer get as much for their retirement savings.
Money Mail calculations today show that a 65-year-old with a £1.07 million defined contribution (DC) pension pot could now secure an annuity paying just £25,000 a year without breaching the lifetime allowance. The pension rises with inflation and would still pay an income to their partner after they die.
Inflation is coming – here s how to fight back and protect your money
Economists are forecasting inflation to reach 5pc in 2022
Energy costs were the biggest contributor to rising prices
We are about to enter a period of higher inflation as pent-up demand is unleashed after 15 months of restrictions, economists have warned.
What has been obvious on investment trading screens since the start of the year, as commodity prices rose and bond prices fell, will soon start to affect consumers when they go to the shops, pay their energy bills and plan their retirement, experts fear.
Inflation figures released this week showed the annual rate of price increases more than doubled between March and April as the Consumer Price Index rose from 0.7pc to 1.5pc. A jump in energy costs was the main contributor thanks to a rise in the price of oil.