If you transfer, choose the right adviser and beware of high fees

age of 75. If the member died after the age of 75, tax is paid at the income tax rate of the person who inherits the pension, or a flat 45pc if it taken as a lump sum. The inheritor can access the money immediately, rather than waiting until their own retirement.

With careful planning around when income is taken, this means that pensions can sometimes be drawn down free of income tax, too. The generous rules mean that it can make sense to exhaust all other assets, including savings accounts and Isas, ahead of pensions. Money held in pensions does not form part of your estate for inheritance tax purposes.

IHT is charged at 40pc on an individual’s assets over £325,000. For the 2017-18 tax year there is an extra £100,000 per person allowance relating to the family home. By 2020-21 a couple will be able to pass on a £1m property tax free. If you are going to face a substantial IHT bill anyway, it may be worth taking advice about whether some of the transferred money could be better spent on a life insurance policy that will pay a tax-free sum on your death to cover the bill. Overall, this could result in a smaller tax liability.

Alternatively, you could keep your final salary pension and buy such a policy to reduce your IHT bill.

A non-smoking male aged 50 could set up a policy guaranteed to pay out £100,000 on his death for a fixed premium of £88 a month through Scottish Widows, for instance. Government rules mean you must seek advice from a regulated financial adviser before you give up a final pension worth £30,000 or more. It is common to be offered a “transfer value” of 30 times the annual income produced by a final salary scheme, so you may need to take advice even if your pension is expected to pay just £1,000 a year.

Only specialist advisers are allowed to work in this area and charges can be high. You might pay, for example, 1pc-3pc of the value of the transfer, so moving a £1m pension pot could incur fees as high as £30,000.

Some advisers will charge only if the transfer goes ahead, so there could be an incentive to recommend a move. Telegraph Money readers have run into problems when an advisory firm declines to facilitate a transfer that it refused to recommend. Some pension companies may also be unwilling to accept a transfer when the adviser has not recommended it.

However, the rules are clear: if can prove that you have taken advice it does not matter whether it is positive or negative, you have the right to transfer.