Item 1 of 2 People carrying British Union Jack flag themed umbrellas walk past the Houses of Parliament in London, Britain, October 21, 2019. REUTERS\/Hannah McKay<\/p>\n
[1\/2]<\/b>People carrying British Union Jack flag themed umbrellas walk past the Houses of Parliament in London, Britain, October 21, 2019. REUTERS\/Hannah McKay Purchase Licensing Rights, opens new tab<\/a><\/p>\n LONDON, Nov 5 (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”<\/a> to prop up public finances.Most British savers can now receive up to 25% of their pension as a tax-free lump sum. Some experts on fiscal policy have speculated<\/a> that Rachel Reeves, the finance minister, might reduce the amount that can be withdrawn tax-free, a potential motive for savers to withdraw funds before the rules change.<\/p>\n Sign up here.<\/a><\/p>\n Six of 10 of Britain’s big wealth managers, including Schroders (SDR.L), opens new tab<\/a> and Aberdeen (ABDN.L), opens new tab<\/a>, contacted by Reuters said they had seen increases in clients withdrawing tax-free lump sums from pensions in recent months, citing budget fears.<\/p>\n 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.<\/p>\n “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.<\/p>\n AJ Bell (AJBA.L), opens new tab<\/a> said the volume of requests to withdraw pension cash in October and September was up on the same period last year and about three times higher than in 2023.<\/p>\n Most of the managers did not quantify the increase or clarify how this compared with past periods.<\/p>\n Quilter (QLT.L), opens new tab<\/a> said the spike had been significant enough for it to have shared the data with the government to show the impact of budget speculation, but was not as large as in the run-up to the 2024 budget. Phoenix (PHNX.L), opens new tab<\/a> said the rise was “relatively modest” and comparable to other busy periods.TAX-FREE LUMP SUMS DISPROPORTIONATELY BENEFIT THE WEALTHYIn a rare pre-budget speech on Tuesday, Reeves<\/a> paved the way for broad tax rises to avoid a return to “austerity”.<\/p>\n The Institute for Fiscal Studies think tank said last year that tax-free pension withdrawals disproportionately benefit the wealthiest and cost the exchequer 5.5 billion pounds annually.<\/p>\n Britain’s finance ministry did not respond to a request for comment on whether it is considering changing pension taxation.<\/p>\n The CEO of Legal & General (LGEN.L), opens new tab<\/a>, Antonio Simoes<\/a>, 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.<\/p>\n 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.<\/p>\n Financial advisers typically caution against removing money from retirement pots because investment gains elsewhere are usually taxed.<\/p>\n 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. Reporting by Naomi Rovnick and Iain Withers Our Standards: The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n\n
\n($1 = 0.7451 pounds)<\/p>\n
\nEditing by Tommy Reggiori Wilkes, Alex Richardson, Peter Graff<\/p>\n