Older savers should avoid making rash decisions about their pension cash based on \u201cfear and rumour\u201d, experts urged this week.<\/p>\n
The warning came as figures showed a rise in the sums people were pulling out of their retirement pots.<\/p>\n
Data from the Financial Conduct Authority<\/a> showed that UK pension savers withdrew more than \u00a370bn from their retirement pots in 2024-25 \u2013 up almost 36% on the \u00a352bn taken out the year before. Of this, \u00a318.3bn was tax-free cash \u2013 an increase of 62% on the \u00a311.3bn the previous year.<\/p>\n Many financial experts say \u201cbudget jitters and fiscal rumours\u201d are driving this trend as speculation swirls about what measures the chancellor, Rachel Reeves<\/a>, will announce in her budget on 26 November.<\/p>\n They warn kneejerk decisions could wreak havoc on people\u2019s long-term plans.<\/p>\n Eamonn Prendergast, a chartered financial adviser at Palantir Financial Planning, said pension pots<\/a> were \u201cmeant to last decades, not be raided in panic. The government must do more to quash rumours early and give clarity.\u201d<\/p>\n Rachel Vahey at the investment platform AJ Bell said the concern is \u201cpeople aren\u2019t making decisions based on what\u2019s best for them but because they are worried about possible changes to pensions tax incentives\u201d.<\/p>\n Currently, from the age of 55 (57 from April 2028) you can usually take up to 25% of your pension as a tax-free lump sum, to a limit of \u00a3268,275.<\/p>\n However, there is speculation that the government may slash this maximum or make other changes.<\/p>\n Stephen Lowe at the retirement specialist Just Group said rising living costs could be forcing more people to dip into their pension money to pay the bills, but added that the sums being withdrawn might also reflect concern the Treasury may view tax-free cash as \u201can easy target\u201d.<\/p>\n The figures came after what some called an \u201cinheritance tax raid<\/a>\u201d on unspent pension money that was announced last October.<\/p>\n Pensions tend not to be counted as part of a person\u2019s estate for inheritance tax (IHT) purposes. However, from April 2027, money left in a defined contribution pension will be included in IHT calculations<\/a>.<\/p>\n