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Chancellor George Osborne: "This is for everyone who works hard and saves hard for their retirement"
A future Conservative government would freeze benefits paid to people of working age for two years, Chancellor George Osborne has told the Conservative Party conference.
Mr Osborne said the proposed freeze, which would not include pensions, disability benefits and maternity pay - would save £3 billion.
In his speech to the conference, Mr Osborne said it would be "a serious contribution to reduce the deficit".
It would come into effect in 2016.
The chancellor also pledged to scrap the 55% cent tax rate on inherited pension funds.
And he pledged to "put a stop" to the "extraordinary lengths" to which he said some technology companies went in order to avoid paying tax.
"If you abuse our tax system, you abuse the trust of the British people," he said.
"And my message to those companies is clear. We will put a stop to it. Low taxes, but low taxes that are paid."
An extra £25bn of permanent savings would be needed to eliminate the UK's deficit, Mr Osborne said.
He told delegates: "The option of taxing your way out of a deficit no longer exists, if it ever did."
Britain had the fastest-growing economy of any developed nation, the chancellor said, but he was not "marvelling" at what had been done.
"We here resolve that we will finish the job that we have started," he said, saying Britain's national debt was still "dangerously high".
Mr Osborne said it was a "dangerous fallacy" that the link between economic prosperity and people's personal finances had been broken.
The 55% tax currently applies to untouched "defined contribution" pension pots left by those aged 75 or over, and to pensions from which money has already been withdrawn.
Inheritors will now only pay the marginal income tax rate, or no tax at all if the deceased was under 75 and the pension is left untouched.
The Treasury predicts the new policy will cost approximately £150m per year.
The idea was first floated in July, when a consultation was launched.
Analysis: Simon Gompertz , BBC personal finance correspondentThe end of the 55% tax charge will be a significant gain for some.
But the question Mr Osborne will have to answer is whether he is creating a way for better-off savers to escape tax.
They will have an incentive to use money stored in bank accounts and investments before dipping into the pension pot.
The reason? The pension will become a way of protecting up to £1.25m from some or all tax after death.
Those on lower incomes, who can't save much, and need the money during retirement, have not been in danger of paying the 55% and are unlikely to benefit from its removal.
Some experts say the Osborne reforms turn pension saving on its head.
The point used to be to spread your income over your lifetime.
In future, pensions could become a method of preserving savings beyond the grave.
The government estimates that the scrapping of the 55% rate is likely to affect 320,000 people. It is the latest in a string of changes to pension regulations introduced by George Osborne.
In March's Budget, the chancellor announced that pensioners would have the freedom to cash in as much or as little of their pension pot as they wanted, removing the need to buy an annuity.
The latest measure will apply to all inherited pensions received from April 2015.
The beneficiaries of anyone who dies before that date may also benefit from the tax cut, if payment is delayed until after the new policy comes into effect.
It says 12 million Britons have some form of defined contributions pensions saving.
Spouses and financially dependent children under the age of 23 are already exempt from the 55% tax, but the new policy introduces the following changes:
- When the deceased is 75 or over, beneficiaries will only have to pay their marginal income tax rate, and only when they take money out of the pension. There will be no restrictions on how much of the fund can be withdrawn at any one time.
- Tax-free access to the pension pot of those who die under 75, to any beneficiary, including if the pension is already in "drawdown", meaning income has been drawn from the fund while it is still being invested.
For Labour, Chris Leslie. shadow chief secretary to the Treasury, said: "George Osborne claims he has fixed the economy, but he's only fixed it for a privileged few at the top."
What is your reaction to George Osborne's proposals? You can email your comments to haveyoursay@bbc.co.uk
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