Overview

• HMRC’s latest newsletter states that once a pension lump sum is paid, the resulting tax position, including use of the lump sum allowance and lump sum death benefit allowance, will normally stand even if money is returned.
• The FCA has clarified that accessing tax‑free cash does not automatically create statutory 30‑day cancellation rights, though providers may choose to offer their own limited contractual cancellations.
• Where providers offer cancellations, customers must be told that any lump sum already paid still counts toward the lifetime tax‑free cap, reported as £268,275.
• Withdrawals rose about 36% in 2024/25 during a rush to take cash before potential policy changes, with experts urging caution ahead of the 26 November Budget.
• Reported figures indicate many first‑time accessors triggered the Money Purchase Annual Allowance and relatively few sought professional advice, heightening risks of constrained future contributions and unexpected tax bills.