It also smells like a panic reaction, as, in a fleeting reference in his speech, the Chancellor said his fear was that “people could claim tax relief for the purpose of funding purchases of holiday and second homes for their or their family’s personal use”. This does not explain why ordinary buy to let should be excluded.It was typical of this Chancellor that the U-turn only became clear from Treasury documents released after his speech. One might have thought that, with all the resources at his disposal Gordon Brown would have done his research properly before announcing major changes in what pension funds could invest in. If a private sector firm had led investors up the garden path in the way that Brown has, the Government would have been right at the front of the queue to criticise it and we would have had talk of a misselling scandal. How wonderful it would be if the Government were a regulated firm and the FSA, the regulator created by Gordon Brown, required the Chancellor to be “clear, fair and not misleading”, and balanced, in all his statements. The financial services industry has wasted tens of millions of pounds preparing for A-Day and will be reluctant to spend much money planning for Reits until the relevant legislation detailing their operation is on the statute book. Many investors who have committed pension fund money to residential property will have bought off-plan properties for completion after April 5, 2006. Until they become habitable, it appears these will be a permitted pension fund investment and so to avoid penal taxation any off plan property in a Sipp will need to be sold by the Sipp prior to it being completed. Any developments where a substantial proportion of the units have been sold off plan may come under severe selling pressure as there could be a sizable number of forced sellers. This could provide some rich pickings for other investors or residential purchasers. The Chancellor’s already heavily tarnished record on pension funds has sunk even lower. This was a lost opportunity to get people excited again about pensions. People already investing in residential property for their pension will continue to do so but outside a pension fund. New investors are less likely to be attracted to pensions. The full economic cost of the Chancellor’s U-turn in terms of inadequate pension provision will not be felt for many years to come, in fact, until well after he has been elevated to the House of Lords.