British pension savers are accelerating withdrawals from their retirement funds ahead of the government’s upcoming budget, driven by concerns that the tax-free pension lump-sum rules could be changed.

Six out of ten major UK wealth managers—including Schroders and Aberdeen—told clients they had seen noticeable increases in requests for pension cash-outs in recent months.

One private bank, Arbuthnot Latham, reported volumes up 300 per cent year-to-date compared with the whole of 2024.

The current rule allows most savers to take up to 25 per cent of their pension pot tax-free, but speculation is growing that Chancellor Rachel Reeves may reduce that allowance or impose a cap as part of efforts to stabilise public finances.

The think-tank Institute for Fiscal Studies estimates the tax-free withdrawals cost the Exchequer approximately £5.5 billion annually.

Data from the Financial Conduct Authority show that total pension withdrawals reached over £70 billion in 2024-25—a 36 per cent rise from the previous year—of which around £18.3 billion was taken as tax-free cash, up 62 per cent year-on-year.

Analysts attribute much of this surge to “budget jitters” rather than pure retirement planning.

Financial advisers warn that such pre-emptive moves may undermine long-term retirement savings, noting that even those over age 55 should assess the impact of withdrawals carefully.

Some highlight that hasty decisions may lead to unintended tax liabilities or reduced ability to rebuild pension contributions.

While no official policy announcement has yet been made, the pattern reflects heightened anxiety among savers about future changes to pension taxation and the desire to act before any reforms take effect.