Overview
- HMRC says tax treatment of pension lump sums cannot be unwound and confirms that returning money may be classed as an unauthorised payment carrying charges typically at 55% and up to 70% in some cases.
- The FCA reiterates that provider cancellation rights do not override tax rules, clarifying that accessing tax‑free cash is not a cancellable contract in its own right.
- Fresh withdrawals have picked up ahead of the 26 November Budget after a prior surge in 2024/25, when tax‑free lump‑sum withdrawals jumped more than 60% to about £18.1bn and total pension withdrawals reached £70.88bn.
- Industry voices urge Chancellor Rachel Reeves to provide clarity, with calls for a ‘pension tax lock’ to rule out changes to tax‑free cash or contribution relief and reduce panic decisions.
- Advisers warn that moving funds outside pensions can increase exposure to income, capital gains and inheritance taxes, that recycling lump sums back into pensions can trigger penalties, and that taking taxable withdrawals can activate the £10,000 MPAA cap.