Chancellor George Osborne is expecting the 55 per cent death charge for money in pension funds to be cut following his Budget overhaul.
In his Budget the Treasury said it will would consult on cutting the 55 per cent recovery charge on pension funds when a member dies. It is only applicable on post 75 unvested pots and drawdown pots.
Speaking at a Treasury select committee hearing on the Budget today, Osborne says he expects the charge to be cut during the review.
Osborne says the rate needs to be changed in light of the new pensions regime where savers can access their entire pension pot in cash from age 55 from next April.
Conservative MP Jesse Norman says the 55 per cent level was designed for a different regime.
Osborne said: “In the pensions document published alongside the Budget we specifically flagged up this 55 per cent rate and said it was likely to be too high and designed for a different regime where they were encouraging people to exhaust pension savings by the end of their life.
“We have a new regime and we are consulting on the 55 per cent rate but I would anticipate it being lower.”