Finance
UK savers pulling cash from pensions ahead of budget, money managers say
Published by Global Banking and Finance Review
Posted on November 5, 2025
3 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on November 5, 2025
3 min readLast updated: January 21, 2026
UK savers are withdrawing pensions ahead of budget changes due to tax concerns. Wealth managers report significant increases in cash withdrawals.
By Naomi Rovnick and Iain Withers
LONDON (Reuters) -British money managers are reporting a jump in people withdrawing cash from their pensions before this month's budget, amid fears for their tax advantages as the government warns it needs to make "hard choices" to prop up public finances.
Six of 10 of Britain's big wealth managers, including Schroders and Aberdeen, contacted by Reuters said they had seen increases in clients withdrawing tax-free lump-sums from pensions in recent months, citing budget fears.
Private bank Arbuthnot Latham, which typically serves richer clients, told Reuters pre-budget anxiety had pushed withdrawals to record levels - up 300% by volume year-to-date compared with the whole of 2024.
"This year has seen a huge increase in clients taking lump sums out relative to their financial needs," said Eren Osman, managing director of wealth management at Arbuthnot Latham.
AJ Bell said the volume of requests to withdraw pension cash was three times higher in October and September versus the same period two years earlier.
Most of the managers did not quantify the increase or clarify how this compared with past periods.
Quilter said the spike had been significant enough for it to have informed the government, but was not as large as in the run-up to the 2024 budget. Phoenix said the rise was "relatively modest" and comparable to other busy periods.
TAX-FREE LUMP SUMS DISPROPORTIONATELY BENEFIT THE WEALTHY
British finance minister Rachel Reeves on Tuesday paved the way for broad tax rises to avoid a return to "austerity" in a rare pre-budget speech.
Most savers can receive up to 25% of their pension as a tax-free lump sum. That costs 5.5 billion pounds annually and disproportionately benefits the wealthiest, the Institute for Fiscal Studies think tank said last year.
Among the revenue-raising measures Reeves could turn to, according to pre-budget speculation, would be reducing the amount that can be withdrawn tax-free.
Britain's finance ministry did not respond to a request for comment.
The CEO of Legal & General, Antonio Simoes, told Reuters last month that tax changes which deterred pension saving would be "really concerning for the country". A company spokesperson declined to comment further.
Withdrawals from pension pots were already on the rise this year. The amount withdrawn soared 76% in the six months to March versus a year earlier, Financial Conduct Authority data show.
Financial advisers typically caution against removing money from retirement pots because investment gains elsewhere are usually taxed.
Rathbones and Evelyn Partners, two of the other wealth managers, said they were fielding more requests for withdrawals but were working through options with clients. ($1 = 0.7451 pounds)
(Reporting by Naomi Rovnick and Iain Withers; Editing by Tommy Reggiori Wilkes and Alex Richardson)
A pension is a retirement plan that provides income during retirement, typically funded by contributions from employees and employers.
A tax-free lump sum is a portion of your pension that you can withdraw without incurring tax, usually up to 25% of your total pension pot.
Wealth managers are financial professionals who provide personalized financial services and investment advice to individuals and families.
A budget is a financial plan that outlines expected income and expenses over a specific period, helping individuals or organizations manage their finances.
Tax advantages refer to benefits that reduce the amount of tax owed, such as deductions, credits, or exemptions that can lower taxable income.
Explore more articles in the Finance category
