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Many people over the age of 55 chose to withdraw money from their pensions(Image: Kinga Krzeminska via Getty Images)<\/p>\nThe rule change has prompted many savers to reconsider their withdrawal strategies. Under current rules, once people hit the age of 55, they’re entitled to take out 25 per cent of their pot tax-free<\/p>\n
10:34, 16 Jun 2025Updated 16:07, 16 Jun 2025<\/p>\n
Many people over the age of 55 chose to withdraw money from their pensions(Image: Kinga Krzeminska via Getty Images)<\/p>\n
Amidst rising living costs and political uncertainty, UK households are in a rush to dip into their pension pots<\/a> early, with hundreds of thousands withdrawing a whopping \u00a32.2bn last year. Official HMRC<\/a> figures have highlighted a significant surge, showing that 120,000 people between the ages of 55 and 56 made taxable withdrawals from their pensions<\/a> in 2023 – 24, marking an 18 per cent increase over the past five years.<\/p>\n Under current rules, once people hit the age of 55, they’re entitled to take out 25 per cent of their pension pot tax-free, subject to a ceiling of \u00a3268,275. Beyond this threshold, any further withdrawals incur taxation as income.<\/p>\n READ MORE: Simple airport duty free trick to bag cheaper beauty and alcohol before arriving<\/a><\/p>\n Investment expert Jason Hollands from Bestinvest commented on the trend, suggesting: “Demographic patterns will be a factor. But other possible influences are a rise in business exits and second property disposals ahead of the election enabling more people to take early retirement.”<\/p>\n From the perspective of wealth management, Daniel Hough of RBC Brewin Dolphin pointed out: “Retirement is lasting longer for people \u2013 by accessing their pensions at 55, there will be more pressure on providing a sustainable income throughout retirement, however long it may last.”<\/p>\n Highlighting potential risks associated with this behaviour, Andrew Tricker from Lubbock Fine Wealth Management, who procured the data, saod: “The large number of savers withdrawing from their pensions before actually retiring is very concerning. Many of them are withdrawing too much \u2013 and too early.”<\/p>\n Get pension news and advice straight to your WhatsApp!<\/p>\n Want the latest information on pensions? The Mirror has launched its very own Money WhatsApp community where you’ll get all the most recent pension news and money-saving tips straight to your phone.<\/p>\n We’ll send you the latest breaking updates and exclusives all directly to your phone. Users must download or already have WhatsApp on their phones to join in.<\/p>\n All you have to do to join is click on this link<\/a><\/strong>, select ‘Join Chat’ and you’re in! We may also send you stories from other titles across the Reach group.<\/p>\n We will also treat our community members to special offers, promotions, and adverts from us and our partners. If you don\u2019t like our community, you can check out any time you like. To leave our community click on the name at the top of your screen and choose Exit group. If you\u2019re curious, you can read our Privacy Notice<\/strong><\/a>.<\/p>\n CLICK HERE TO JOIN<\/a><\/strong><\/p>\n Financial specialists also cautioned that savers might feel impelled to overspend from their pension funds to sidestep inheritance tax charges stemming from new regulations introduced by the Labour Party<\/a> government.<\/p>\n Kate Smith from the pensions outfit Aegon commented: “The expectation is that those individuals with large estates will access their pensions earlier to avoid inheritance tax, and later life tax planning will become increasingly important.”<\/p>\n Mr Hough expressed that the proposals sparked “concern and some confusion” for those approaching retirement age, reports Birmingham Live<\/a>.<\/p>\n