Tens of thousands of people who had hoped to bequeath a substantial amount of their pension to their relatives have had their plans dashed by a pre-Budget measure that could see more than 80 per cent of money inherited from personal pensions wiped out by taxes.

Gordon Brown was facing a backlash on Thursday night as the pensions and insurance industry digested details of a move that essentially removed a freedom over personal pensions that he had introduced eight months ago.