The number of people accessing their pension savings as soon as they are able to has reached a five-year high, amid growing concerns about upcoming inheritance tax (IHT) changes, research from Lubbock Fine has shown.

The wealth management firm revealed that 116,000 individuals withdrew lump sums from their pensions at age 55 last year, up from 110,000 the previous year.

The total value withdrawn by this group also increased to £2.3bn, compared to £2.1bn a year earlier, highlighting a shift in saver behaviour.

Lubbock Fine chartered financial planner, Andrew Tricker, argued the trend has been driven, in part, by policy changes announced in the Autumn Budget 2024, which confirmed that pensions would fall within the scope of IHT from April 2027.

“As pensions will be dragged into the IHT net, many are rushing to take money out as soon as they can to help mitigate what they see as excessive tax bills for their dependents,” he added.

“What is surprising is that this trend has spread to people who have decades left based on average life expectancy."

Meanwhile, Lubbock Fine chartered financial planner, Nicholas Clark, suggested that withdrawal activity was likely to increase further as the 2027 deadline approached.

“As we get closer to the deadline, more people will tap into their pension pots - particularly those who can do so without creating a big tax liability,” he said.

“Pensions were widely seen as highly ‘tax-efficient’, so many people built and preserved very large pots to pass on wealth to their loved ones free of IHT.

"Some of them have now started to change course, often without fully thinking it through.”

Clark added that some individuals were choosing to pass funds on during their lifetime, taking advantage of gifting rules that allow transfers made more than seven years before death to fall outside the IHT net.

---