Rachel Reeves SLAMMED for pension 'disaster' as Britons withdraw £5bn from savings to avoid tax rise

Britons have removed £5billion from their pension funds to avoid being targeted in a tax raid by Chancellor Rachel Reeves, according to Government data.Unprecedented numbers of British retirees emptied their retirement savings following the Chancellor's autumn Budget announcement on inheritance tax reforms. Some £5billion was withdrawn during the initial quarter of 2025, marking the largest withdrawal period since retirement access rules were liberalised ten years ago.The surge in pension pot access came after Reeves unveiled plans to eliminate the inheritance tax exemption for retirement funds starting in April 2027. Under the new regulations, pension assets will face taxation rates reaching 40 per cent upon death. HMRC statistics indicate that 672,000 pensioners accessed their retirement savings between January and March, roughly five per cent of Britain's total pensioner population.The withdrawal figures represent a 25 per cent rise compared to the corresponding period in 2024, with 13 per cent more individuals accessing their retirement funds. This marks a significant acceleration in pension pot depletion since the Budget announcement last October. Particularly striking is the behaviour among Britain's oldest pensioners. Throughout 2024, the number of people aged 81 and above withdrawing pension funds increased by 50 per cent. This age group removed £360million from their retirement savings, an 80 per cent jump in the total amount withdrawn.Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.Former pensions minister Baroness Altmann has issued stark warnings about the policy's consequences, describing the situation as "a disaster" and predicting a "pensioner poverty time bomb". She is urging the Chancellor to abandon the inheritance tax changes, cautioning that increasing numbers will empty their retirement accounts prematurely."It's a disaster," Altmann said, expressing concern that withdrawal rates would accelerate as awareness of the impending tax charge spreads. The Conservative peer characterised the policy implementation as "draconian" and warned it was creating future problems. She is advocating for amendments in the House of Lords that would cap any levy on inherited pension funds at 20 per cent through a "pension recovery tax" rather than the proposed higher rates.The inheritance tax modifications mean retirement savings will face potential double taxation from 2027 as beneficiaries inheriting pension funds will encounter both inheritance tax and income tax at their marginal rate, creating a combined levy that could consume substantial portions of inherited retirement wealth.LATEST DEVELOPMENTS:Rachel Reeves could target pensions in 'increasingly desperate' tax raid as Budget loomsLabour's 'double whammy' death tax raid slammed as Rachel Reeves prepares to slash reliefPension WIN as Britons avoid tax raid on retirement savings - how to claim £4k refund from HMRCAltmann warned that the changes pose "an existential threat to the long-term survival of our DC [defined contribution] pensions" and compared the potential damage to Gordon Brown's controversial pension tax reforms. She highlighted that savers accumulating between £200,000 and £300,000 face particular risks."Why on earth would I want to lose two thirds of my pension to the taxman? I'll just take it out as soon as I can," Altmann said, describing the mindset driving current withdrawal behaviour.Financial services professionals are already witnessing shifts in client behaviour as the 2027 deadline approaches. Jamie Jenkins, policy director at Royal London, which oversees more than £170billionn in client assets, confirmed "increased interest from advisers and their clients in how they can mitigate the potential inheritance tax bill".The Treasury defended its position, stating the reforms would "incentivise pensions savings for their intended purpose of funding retirement instead of them being openly used as a vehicle to transfer wealth".

Rachel Reeves SLAMMED for pension 'disaster' as Britons withdraw £5bn from savings to avoid tax rise





Britons have removed £5billion from their pension funds to avoid being targeted in a tax raid by Chancellor Rachel Reeves, according to Government data.

Unprecedented numbers of British retirees emptied their retirement savings following the Chancellor's autumn Budget announcement on inheritance tax reforms.


Some £5billion was withdrawn during the initial quarter of 2025, marking the largest withdrawal period since retirement access rules were liberalised ten years ago.

The surge in pension pot access came after Reeves unveiled plans to eliminate the inheritance tax exemption for retirement funds starting in April 2027.


Rachel Reeves and older man


Under the new regulations, pension assets will face taxation rates reaching 40 per cent upon death. HMRC statistics indicate that 672,000 pensioners accessed their retirement savings between January and March, roughly five per cent of Britain's total pensioner population.

The withdrawal figures represent a 25 per cent rise compared to the corresponding period in 2024, with 13 per cent more individuals accessing their retirement funds.

This marks a significant acceleration in pension pot depletion since the Budget announcement last October. Particularly striking is the behaviour among Britain's oldest pensioners.

Throughout 2024, the number of people aged 81 and above withdrawing pension funds increased by 50 per cent. This age group removed £360million from their retirement savings, an 80 per cent jump in the total amount withdrawn.

Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.


Rachel Reeves


Former pensions minister Baroness Altmann has issued stark warnings about the policy's consequences, describing the situation as "a disaster" and predicting a "pensioner poverty time bomb".

She is urging the Chancellor to abandon the inheritance tax changes, cautioning that increasing numbers will empty their retirement accounts prematurely.

"It's a disaster," Altmann said, expressing concern that withdrawal rates would accelerate as awareness of the impending tax charge spreads.

The Conservative peer characterised the policy implementation as "draconian" and warned it was creating future problems.



She is advocating for amendments in the House of Lords that would cap any levy on inherited pension funds at 20 per cent through a "pension recovery tax" rather than the proposed higher rates.

The inheritance tax modifications mean retirement savings will face potential double taxation from 2027 as beneficiaries inheriting pension funds will encounter both inheritance tax and income tax at their marginal rate, creating a combined levy that could consume substantial portions of inherited retirement wealth.

LATEST DEVELOPMENTS:


Woman looking at letter and inheritance tax calculator


Altmann warned that the changes pose "an existential threat to the long-term survival of our DC [defined contribution] pensions" and compared the potential damage to Gordon Brown's controversial pension tax reforms. She highlighted that savers accumulating between £200,000 and £300,000 face particular risks.

"Why on earth would I want to lose two thirds of my pension to the taxman? I'll just take it out as soon as I can," Altmann said, describing the mindset driving current withdrawal behaviour.

Financial services professionals are already witnessing shifts in client behaviour as the 2027 deadline approaches. Jamie Jenkins, policy director at Royal London, which oversees more than £170billionn in client assets, confirmed "increased interest from advisers and their clients in how they can mitigate the potential inheritance tax bill".

The Treasury defended its position, stating the reforms would "incentivise pensions savings for their intended purpose of funding retirement instead of them being openly used as a vehicle to transfer wealth".