# Pensioners withdraw record tax-free lump sums

> Pensioners took over £22 billion in tax-free lump sums this tax year, risking retirement savings.
- Title: Pensioners withdraw record tax-free lump sums · MoneyWeek
- Summary: Pensioners took over £22 billion in tax-free lump sums this tax year, risking retirement savings. Pensioners withdrew £22 billion in tax-free lump sums…
- Keywords: pensioners, tax-free lump sums, fca, aj bell, pension tax, retirement savings, pension providers, chancellor, budget, compound interest, withdraw, record
- Source: MoneyWeek — https://moneyweek.com/personal-finance/pensions/pensioners-withdraw-record-tax-free-lump-sums
- Published: 2026-10-02T16:09:14+00:00
- Read time: 1 min
- Topics: pensioners, tax-free lump sums, fca, aj bell, pension tax, retirement savings, pension providers, chancellor, budget, compound interest
## Pensioners withdraw record tax-free lump sums
Retirees withdrew over £22 billion from their pensions in tax-free lump sums in the 2025/26 tax year, up more than 20% compared to the previous tax year.
## Tax-free lump sums rose sharply
Pensioners took over £40 billion in tax-free lump sums in the last two tax years alone, according to Financial Conduct Authority data.
## Tax-free cash rules allow up to 25%
Under pension tax-free cash rules, you can normally withdraw up to 25% of your pension pots free from tax.
## Experts link withdrawals to tax fears
Experts at AJ Bell say the boom in withdrawals may have been driven by fears of increased taxation at Labour's first two Budgets.
## Withdrawals surged in 2024/25
FCA data shows the total taken in tax-free pension lump sums rose to £18.3 billion in 2024/25, up from £10 billion in 2023/24.
## Chancellor left tax-free cash untouched
Despite speculation of a tax raid, chancellor Rachel Reeves left pension tax-free cash untouched in the 2025 Autumn Budget.
## AJ Bell warns of economic risks
AJ Bell's chief executive Michael Summersgill said the rush to take tax-free cash began in 2024 and risks reducing long-term investment capital.
## AJ Bell urges tax stability
AJ Bell has urged the new chancellor John Healey to publicly commit to not making major changes to pension tax-free cash rules.
## Risks of early withdrawals
Early withdrawals risk lower compound interest growth and potential tax consequences if you change your mind.
## Key takeaway

Pensioners withdrew £22 billion in tax-free lump sums during 2025/26 tax year, raising concerns about premature pension withdrawals.