Why it’s essential to consider your next steps and avoid falling foul of complex rules
Every year, thousands of savers take advantage of pension freedom rules to withdraw tax-free lump sums from their pots. With speculation circulating before the Autumn Budget that these lump sums might be reduced or abolished, some savers are choosing to act sooner rather than later. This trend is reflected in recent figures from the Financial Conduct Authority (FCA), which show the total value of money withdrawn from pension pots increased to £70,876m in 2024/25 from £52,152m in 2023/24[1]. This represents a 35.9% rise.
Financial challenges that could impact your income and lifestyle during your golden years
Retirement signifies a fundamental shift from accumulating wealth to utilising it. After years of saving and investing, this new phase demands a different mindset, one focused on capital preservation, risk management, and sustainable income over many decades. Instead of pursuing maximum returns, the priority is on sequencing withdrawals effectively, maintaining an appropriate asset mix, and building buffers for market volatility.
Even small top-ups or one-off payments could accumulate to thousands in future retirement savings
Nearly a third of adults in the UK are now contributing more than the minimum into their workplace pensions. Research shows that 31% of people have voluntarily increased their regular pension contributions, while one in ten have made additional one-off payments to boost their future savings[1]. The findings highlight how small, consistent top-ups can significantly improve retirement outcomes, even for those on average salaries.
102.3 billion withdrawn flexibly from pension pots since 2015
Seven in ten people who withdrew funds from their pensions over the last decade were under 65, according to recent findings from the Department for Work and Pensions (DWP). The data highlights concerns about accessing retirement pots before reaching the State Pension age.
Increasing awareness of intergenerational wealth transfer
A significant proportion of people (47%) plan to pass on their wealth to future generations, with over a third (38%) intending to transfer assets directly to their children, according to a new report[1]. However, many are unaware of how to do this in a tax-efficient way.
