Overview
- In the November 26 Budget, the 25% tax‑free pension cash allowance, capped for most at £268,275 from age 55, will remain unchanged according to Treasury officials.
- Industry data show withdrawals from retirement accounts topped £70 billion in 2024/25, a 36% rise that followed earlier uncertainty over potential cuts.
- Treasury sources indicate officials are weighing a cap on the NI advantages linked to salary‑sacrifice pension contributions, with estimates suggesting a typical cost of about £210 a year for workers.
- Financial advisers caution that rushing to take tax‑free cash can harm long‑term plans and may trigger recycling rules that bring hefty tax charges.
- Prior proposals from Labour‑aligned voices to cap tax‑free cash more sharply, including suggestions of £100,000 and £40,000 limits, helped fuel the pre‑Budget debate.