Pension Lump Sum Withdrawals Rise Amid Tax Fears
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Pension Lump Sum Withdrawals Surge: UK pension savers substantially increased their tax-free lump sum withdrawals in the 2024/25 financial year, rising by over 60% to £18.1 billion. Driving Factors: This surge is attributed to concerns about potential changes to pension tax rules, particularly the introduction of inheritance tax on pensions by April 2027.The cost of living crisis and higher interest rates may have also contributed.
Post-Budget increase: In the six months leading up to and including March 2025, withdrawals increased by 36.5% compared to the previous six months. The number of savers withdrawing also rose by 33% during the same period.
government Revenue: The government anticipates raising £1.5 billion by 2030 by including pensions within inherited estates.
* Expert Opinion: Emma Sterland from Evelyn Partners believes the increase is driven by uncertainty and potential panic related to policy changes.