Wealth manager trade body Pimfa has called for a clear tax road map to stem the tide of people accessing their tax-free pension cash because of speculation and headlines.

The latest FCA data showed that the total number of pension plans accessed for the first time in 2024/25 rose by 8.6% to 961,575.

Pimfa pointed out that the number of pension plans entering drawdown where only the tax-free lump sum was taken surged to 111,878 - up 13% in just six months, 33% compared to last year.

Simon Harrington, Head of Public Affairs at PIMFA, said: “Endless speculation about changes to pension rules - particularly the future of the 25% tax-free lump sum - is already having a real and detrimental impact on consumer behaviour.

“Last year, many people made decisions to unnecessarily access their tax-free cash based solely on headlines. This decision has proved irreversible for them and will impact their future pension saving ability.”

He warned the persistent uncertainty around pension reforms undermines confidence and prompts behaviour that risks impacting people’s financial futures.

Taking the 25% reduces the invested balance, depriving the consumer of much needed investment growth in the 10 years or more up to their State Pension age, he said. Pimfa calculated that could be equivalent of up to five years of the average state pension income.

He said the uncertainty, coupled with policy interventions such as the plan to levy IHT on pension funds, runs the risk of further discouraging people from in investing in pensions. Mr Harrington said: “Investors need certainty about how wealth can be treated in accumulation and decumulation and the Government should set out a clear taxation roadmap in pursuit of its mission to drive economic growth.

“But we are also mindful of the responsibility which lies with industry and the wider ecosystem. We would also caution against continued unfounded speculation – before further detriment is caused to the financial futures of millions.”