Overview

• FCA data show savers took more than £70bn from pensions in 2024–25, with £18.3bn withdrawn as tax‑free cash after a year‑on‑year jump of about 36% and 62% respectively.
• Financial firms report speculation about cuts to the 25% tax‑free lump sum as a key driver of the spike, with Rachel Reeves yet to rule out changes ahead of 26 November.
• Defined contribution pensions are set to be included in inheritance tax from April 2027, a confirmed shift that is influencing withdrawal decisions.
• Advisers caution that rushing to take cash can be irreversible and may reduce tax‑advantaged growth, urging savers to base choices on personal need rather than rumours.
• AJ Bell and other commentators urge a formal pensions tax lock or a pledge not to alter the tax‑free lump sum until 2029 to restore planning certainty.