Overview

• Regulators and providers report a sharp upswing in high‑value access, with the FCA noting over a 50% year‑on‑year rise in people tapping pots above £250,000 and withdrawals across 2024–25 cited at £70bn versus £52bn a year earlier.
• Current rules let most people from age 55 take up to 25% of their pension tax‑free, capped at £268,275, with the minimum access age due to rise to 57 in 2028.
• HMRC has clarified there is no legislative route to put a tax‑free lump sum back into a pension or undo the tax consequences, and 30‑day cancellation rights do not apply.
• Advisers warn that pulling cash out can harm long‑term outcomes and lose tax advantages, with Murphy Wealth modelling showing delaying the lump sum could extend a typical pot’s life by about seven years; moving funds into cash can also trigger tax on interest for many retirees.
• Policy ideas under discussion include cutting the allowance to £100,000 (IFS) or even £40,000 (previously advocated by Torsten Bell), but experts such as Steve Webb say any overhaul would likely need transitional protections and time to implement rather than taking effect immediately.