British wealth managers are reporting a surge in pension withdrawals ahead of this month’s UK budget — as savers brace for potential cuts to tax-free lump sums.
Currently, Britons can withdraw up to 25% of their pension tax-free.
But with Chancellor Rachel Reeves warning of “hard choices” to fix public finances, many fear this benefit may soon shrink.
⚠️ Pre-Budget Panic
Six of the UK’s major wealth managers — including Schroders, Aberdeen, AJ Bell, and Quilter — say they’ve seen a sharp jump in clients cashing out early:
- Arbuthnot Latham: withdrawals up 300% year-to-date
- AJ Bell: October withdrawals up 3× vs 2023
- Quilter: data shared with government as warning
“This could be the easiest tax relief to target — it benefits the wealthiest,” said Tom McPhail, Pensions Policy Institute.
🧾 The Policy Backdrop
Tax-free lump sums cost the Treasury £5.5 billion annually, according to the Institute for Fiscal Studies.
While no decision has been confirmed, markets are reading the signals:
Reeves’ pre-budget speech hinted at broad tax rises to avoid another era of austerity.
Antonio Simões, CEO of Legal & General, warned that any policy discouraging pension saving would be “really concerning for the country.”
🔹 The Takeaway
Uncertainty is driving behavior — not need.
As fiscal pressures rise and tax rules tighten, liquidity anxiety is reshaping how Britain’s wealthiest approach retirement planning.
For now, savers aren’t just preparing for retirement —
they’re hedging against policy risk.