Fears of a pensions tax grab have triggered a stampede of withdrawals worth almost £71billion, according to the City watchdog.
The Financial Conduct Authority revealed savers pulled £70.9billion from their pots in 2024/25 – a leap of 36% on the previous year’s £52.2billion.
The number of pensions accessed for the first time also jumped, rising to 961,575 from 885,455.
The surge began in the run-up to last year’s Autumn Budget, when speculation was rife that the Chancellor, Rachel Reeves, would slash the right to tax-free lump sums or bring pension pots fully into the scope of inheritance tax.
Withdrawals accelerated again after ministers confirmed that pensions would face inheritance tax, fuelling fears of a so-called “raid” on retirement savings.
Laura Purkess, personal finance expert at Investing Insiders, said: “There has long been concern that uncertainty around government policy is leading people to make rash decisions with their money, and the latest FCA figures appear to solidify those concerns.
“People clearly shouldn’t be making big decisions about their finances based on speculation alone, as often those rumours don’t come to fruition, as was the case with fears about tax-free lump sums being cut.
“The government needs to get a grip on rumours circulating so far ahead of Budgets and address speculation that could damage people’s finances.”
Financial advisers said many savers had panicked, fearing they would lose benefits that had been in place for decades.
Scott Gallacher, director at Rowley Turton, told Newspage: “I’ve had several clients express real concern about the government’s current direction on pensions and tax. That said, in most cases people are best served by sitting tight.”
But others warned that changes to inheritance tax rules had made pensions less attractive to keep untouched.
Samuel Mather-Holgate, of Mather and Murray Financial, said: “Now that IHT is levied on pension savings, it’s the money that you should be spending first… No wonder withdrawals have gone through the roof.”
Eamonn Prendergast, of Palantir Financial Planning, urged calm: “Fear and rumour are a terrible basis for retirement planning, yet speculation has been running unchecked since last year’s Budget. These pots are meant to last decades, not be raided in panic.”
The FCA figures come as millions of savers await the next Budget, due on November 26, with mounting concern over whether further pension perks could be in the Chancellor’s sights.
Speaking this week as the Office for Budget Responsibility is reportedly set to downgrade a key UK productivity forecast, a Treasury spokesperson said: “We are not going to speculate on the OBR’s forecast. We are committed to keeping taxes for working people as low as possible, which is why at the last budget, we protected working people’s payslips and kept our promise not to raise the basic, hig
