Blog
Retirement Taxation
Pension advice can prevent costly mistakes
Amy Woolliscroft25th August 2026
Retirees who fully withdrew pension pots worth £100,000 or more paid at least £87.2m in income tax during the six months between October 2024 and March 2025, according to analysis of © The Financial Conduct Authority data. The figures highlight the potentially significant tax consequences of taking large pension withdrawals in one go and reinforce the importance of seeking professional financial advice before accessing retirement savings.
Deciding how and when to take pension benefits is one of the most important financial decisions many people will make. A single withdrawal can affect income tax, future retirement income, investment growth and even estate planning. Yet many people continue to make these decisions without regulated advice. Recent © The Financial Conduct Authority data shows that only around 31% of people accessing their pension for the first time receive regulated financial advice, meaning almost seven in 10 are making these important decisions without professional support.1
While taking a full lump sum may seem the simplest option, it can have unintended consequences. Large withdrawals can push savers into higher or additional-rate tax bands, reducing the amount they ultimately receive. Spreading withdrawals over several tax years, or considering alternative retirement income options, can often produce a more tax-efficient outcome, depending on individual circumstances.
Professional advice can help retirees understand the tax implications, assess their income needs and develop a withdrawal strategy that balances flexibility with long-term financial security. The evidence suggests that too many people are still making complex pension decisions alone. As the significant tax bills highlighted demonstrate, those decisions can prove costly and, once pension benefits have been taken, are often irreversible.
If you are considering taking your pension benefits, it's worth speaking to us before making any decisions. We can help you understand the options available and recommend the approach that best suits your individual circumstances. Taking advice before accessing your pension could help you avoid unnecessary tax, make the most of your retirement savings and give you greater confidence that your decisions support your long-term financial goals.
Remember that tax treatment depends on individual circumstances and tax regulations and allowances can change at any time. When it comes to your investments, it's essential to bear in mind that the value of your investments can rise and fall. Positive returns are more likely if you invest for the long term, but this is not guaranteed and you could get back less than you invest.
1 Financial Conduct Authority, Retirement Income Market Data 2024/25, published 16/9/2025
SJP Approved 25/8/2026