Chancellor rules out cutting tax-free pension lump sum limit in Budget

14 Nov 2025

The Treasury has confirmed that Chancellor Rachel Reeves will not cut the tax-free pension lump sum limit in the Autumn Budget on 26 November.

Currently, the majority of pension savers can take 25% of their pension pot tax-free at the age of 55 up to a maximum of £268,275.

Ms Reeves had been under pressure to cut the lump sum limit to £100,000 to help fill a £30 billion hole in the public finances.

Steve Webb, a former Pensions Minister, commented: 'While it is obviously good news that tax-free lump sums are to be left alone in this year's Budget, the widespread speculation - which the government did nothing to quell - may mean that thousands of people made life-changing decisions to withdraw pensions which they may now regret.

'We need the Treasury to make clear that pension tax relief will be untouched for the rest of this Parliament, not just one year at a time, to give savers and investors the confidence and certainty that they need.'