I gave my thoughts on the controversial pension reforms proposed by the Institute of Fiscal Studies ("IFS") at the end of last year.

One of the IFS' proposals was that income tax should be levied on all funds remaining in defined contribution ("DC") pensions at death, irrespective of how old the individual is when they die.

It seems that the government has taken a liking to this particular IFS proposal and has (rather unexpectedly) sneaked it into the recent policy paper on the (rather more anticipated) abolition of the Lifetime Allowance ("LTA").

Current rules state that income tax is only charged if the individual dies aged 75+.  Under 75 the pension funds can pass to beneficiaries free of tax, either as a lump sum or regular withdrawals.  This is seen as a welcome tax relief for families who lose a family member at a relatively young age in today's world.

A key purpose of the IFS' proposed pension reforms was to contribute to a "fairer" tax system.  The abolition of the LTA benefits relatively few people with large pension pots (i.e. £1m+); the unrestricted taxation of inherited pensions would affect everyone.  Has the government got this right?