There has been a huge spike in pension savers taking tax-free cash in the last two years, amid speculation that Labour Government would restrict this facility in its first two Budgets.
ONS data analysed by Broadstone shows savers took £3.9bn of one-off cash payments from their pension pots in the 12 months from Q4 2024- to Q3 2025 — just ahead of last year’s Autumn Budget. This was a 29 per cent increase on the previous equivalent 12 month period, and whopping 81 per cent increase on the same period in 2022/23, before Labour came to power.
Broadstone says these figures show clear spike in both quarters near the Autumn Budget 2024, with lump sum access reaching record levels of £1bn in both Q3 2024 and Q4 2024 around the Chancellor’s initial budget on 30 October 2024.
Lump sum access then dropped back in the next two quarters before seeing another spike of £990m in Q3 2025 before the Autumn Budget held on 26 November of that year.
Speculation was rife that the Chanceller Rachel Reeves would cut the amount people could take as tax-free cash in both these budgets. However Reeves subsequently made no moves to restrict people’s access to their pension funds.
The trend of increasing lump sum access is expected as more adults with DC pensions reach normal minimum pension age — currently 55 years of age. This though is rising to 57 from April 2028.
Broadstone head of DC proposition Kelly Parson says: “This data highlights just how sensitive pension savers can be to speculation around tax and policy changes. It demonstrates the damaging and long-lasting negative impacts that rumour-mongering around pension policy and fiscal events can cause.
“Taking money from a pension is a complex and irreversible decision so it is critical that people aren’t making these important choices based on rumour or without full awareness of the consequences. That’s where better financial education and clearer guidance really do matter.
“As the DC market grows, employers will have a bigger role to play in supporting people as they navigate these decisions. That means clearer communication and making sure staff can access the right guidance and support, so they’re not just reacting to headlines but making choices that genuinely support their long-term retirement outcomes.”