Industry backs axing of death tax

Nearly four in five Buzz respondents said reforms of tax charges on inherited defined contribution (DC) pots were welcome.

Although one in eight condemned the move, many contributors said it would encourage workers to save more, and potentially dissuade them from cashing inpensions prematurely.

"Why should a majority of your DC pot go to the state?" asked one commentator.

Why should a majority of your DC pot go to the state? It’s something you’ve accrued over the years and should be passed on to your estate like any other asset

"It's something you've accrued over the years and should be passed on to your estate like any other asset."

Another contributor said: "The providers have made an absolute fortune out of pots held by them as pure profit after death! All pension pots should be ‘capital protected'. The providers won't like it but it is far fairer for the deceased's family."

"It brings the tax treatment into line with lifetime drawdown, and will result in money being left in the pension until needed," added one respondent. "It will now be up to the heirs whether, and how much, tax is paid, instead of a flat 55% being charged."

Others said the division between those who died before or after the age of 75 - which will remain in a watered down form - was arbitrary. Many added that the announcement was long overdue, with some saying it should have been introduced in the 2004.

But other supporters were a little more cynical. "This is all about politics and the pending election," explained one contributor. "A small change, loudly lauded, that will favour only the well-heeled few and their advisers."

Critics of the move went further, slamming it as nothing more than a targeted tax break to help wealthy people avoid inheritance tax.

"The government seems to be moving away entirely from the concept of ‘pension' schemes," said one disgruntled respondent. "If the government wants to have retirement savings schemes, then let's call them that and stop pretending they have anything to do with pensions."

Chart showing the answer to the question-Do you support government plans to overhaul the tax treatment of DC pension pots after death