Just one in 10 (11%) independent financial advisers (IFAs) have stated that they support the Government’s potential tax rule changes surrounding pension death benefits, Standard Life has found.

Research from the financial services firm found that 92% of over 200 IFAs surveyed said that any changes to the tax rules surrounding pension death benefits would impact their clients’ financial plans.

Currently, if a pension owner dies before age 75, the pension passes tax free to their nominated beneficiaries. If they were older, it is taxed at the beneficiaries’ marginal rate.

However, under new proposals, nominated beneficiaries would either have to receive the pension as a lump sum outside of a pension wrapper or as an income, taxable at their marginal rate.

On this topic, just over a third (34%) of those surveyed are neutral on the subject, with 39% stating that they oppose the changes. Sixteen per cent of advisers said they were unsure.

Of those who opposed the changes, over four in five (82%) suggested this is because financial plans have been put in place based on assumptions about current death benefits.

Nearly three quarters (74%) said pension changes undermine faith in the savings system, with 69% stating that the current death benefits are designed to provide a level of protection for nominated beneficiaries.

For those IFAs that did support the changes, 60% said that it would help harmonise the tax treatment applied depending on the age at which the plan holder dies, with a third (33%) also believing it would encourage savers to view their pension as a source of income rather than an asset to pass to loved ones.

Retail advised managing director at Standard Life, Chris Hudson, said: “There have already been several unexpected changes to pension rules in the last year, creating upheaval for advisers as clients sought advice around what this meant for their finances and financial planning. It’s therefore no surprise that many advisers do not support further changes to pension death benefits tax rules too, especially as this would affect a significant number of their clients’ plans.

“If this proposal was adopted it would cause significant upheaval across the pension’s industry which in turn may struggle to be ready for next April. Without proper planning there’s a risk of customer detriment. This is in addition to the speculation that measures around the scrapping of the lifetime allowance could be reversed if this Government was to lose power, which would likely cause further confusion and uncertainty.

“The majority of advisers believe any further changes to pensions should now be postponed until after the next General Election, which would at least provide some stability for the time being.”

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