The Chancellor announced yesterday that he is abolishing the 55 per cent tax on pension pots.

Backing savers is a key part of our long-term economic plan to build a stronger, healthier economy and secure a better future for Britain.

So we will abolish the 55 per cent tax on pension pots. From April 2015 people who have worked hard and saved all their lives will be able to pass on their hard-earned pension pot tax-free.

When someone 75 or over dies, beneficiaries will only pay their marginal tax rate when they draw down the income, as they would with any pension. If the person who dies is under 75, there will be no tax to pay at all.

Freedom for people’s pensions, a pension tax abolished, and passing on your pension tax-free: these all mean people who have worked and saved all their lives will have the financial independence and security to enjoy their retirement, and be able to pass more on to their children and grandchildren.