29 January 2026
If you are covering the latest pension flexibility statistics, please see the following comment from Jon Greer, head of retirement policy at Quilter:
“HMRC’s latest data reveals that from October to December 2025, 13,652 people who accessed their pensions under the flexibility rules reclaimed a combined £46.26 million in overpaid tax.
“Although this is lower than the 14,612 reclaim forms lodged during the same period in 2024, the typical refund amount has barely shifted, coming in at £3,388 versus £3,389 previously. Even with the slight decline, the continued volume of claims underlines how urgently the system needs reform to prevent over taxation from occurring at all.
“Every quarter we see thousands of pensioners penalised for accessing their own savings, as the system undermines the very flexibility it intended to deliver. HMRC has taken steps to accelerate repayments, but the figures make clear that the core issue remains unresolved. PAYE was designed for regular earnings, not ad hoc pension withdrawals, and retirees continue to face unnecessary administrative hurdles as a result of the unintended friction that is baked into the process.
“One of the pressures driving higher tax liabilities for retirees is the growing share of the personal allowance taken up by the state pension. With the allowance now frozen until April 2031 and the state pension continuing to increase, more people are being pushed into paying tax. While there have been some suggestions that state pension income will not be taxed, it remains to be seen how, if or when this would be enacted. For now, as people take flexible withdrawals to top up their income, a greater proportion becomes taxable, adding to the frustration when over-deductions occur.
“HMRC’s efforts to reduce the administrative burden on savers and minimise the number of overpayments made have had little impact so far, and it is clear further steps need to be taken to properly address the issue. In the meantime, for those considering accessing their pension, seeking guidance or professional financial advice will be key to ensuring you make any pension withdrawals in the most tax efficient way possible.”
