People are withdrawing money from pensions primarily to manage cost-of-living pressures, pay off debt, or fund early retirement, often accelerating these decisions due to fear of tax policy changes. Key drivers include accessing the 25% tax-free lump sum to clear mortgages, supporting family, or moving funds into taxable savings.
Pensioners relying on such schemes are unlikely to see any immediate impact on their retirement income. However, it is worth noting that some corporate sponsors' covenants might be impacted, with risks including reduced demand for products, increased costs, supply chain disruption and an inability to raise finance.
If you withdraw 25% of your pension savings, you're immediately reducing the value of your pension pot. And you're also taking away the chance for that money to potentially grow through returns on investments.
Companies largely stopped offering traditional pensions because DB plans concentrate financial, actuarial and regulatory risk on the employer and create volatile, hard‐to‐forecast liabilities.
Market dips can affect pensions, but short-term losses don't mean your savings have permanently decreased. Avoid making quick decisions based on daily fluctuations; pensions are designed for long-term growth. You can track your pension online or use tracing services to find old pension pots.
If you have a defined contribution pension at work and your employer goes out of business, your pension money is safe. This is because it's not usually managed by your employer.
Important New Rules to Note
Employers can end a pension plan through a process called "plan termination." There are two ways an employer can terminate its pension plan. The employer can end the plan in a standard termination but only after showing PBGC that the plan has enough money to pay all benefits owed to participants.
The "pension 5-year rule" refers to different IRS rules for retirement accounts (like Roth IRAs needing 5 years for tax-free earnings), beneficiary rules (requiring heirs to empty inherited accounts within 5 years), and specific employment pensions (like Federal or Congressional plans requiring 5 years of service for vesting or benefits). It can also relate to UK pension rules for overseas transfers (QROPS) or breaks in service for public sector workers, preventing tax avoidance or loss of benefits.
You can usually take up to 25% of the amount built up in any pension as a tax-free lump sum. The most you can take is £268,275. If you hold a protected allowance, this may increase the amount of tax-free lump sum you can take from your pensions.
Pension increases for 2025 varied, with U.S. Social Security seeing a 2.5% Cost-of-Living Adjustment (COLA) in January, while some state/local pensions (like NY State) had smaller increases (e.g., 1.2%) and different schedules, and federal COLA estimates for 2026 were announced later in 2025 (around 2.8%). Key changes included higher IRS limits for retirement plans and increased Social Security taxable maximums for 2025, with varying boosts based on inflation data for the prior year.
On January 10, 2013, President Barack Obama signed the Former Presidents Protection Act of 2012, reinstating lifetime Secret Service protection for his predecessor George W. Bush, himself, and all subsequent presidents.
In 2025, The national shortfall in assets for state and local pension plans shrank from $1.54 trillion in 2024 to an estimated $1.27 trillion shortfall in 2025. This is nearly the same national unfunded liability level as in 2009 ($1.37 trillion).
You may inherit part of or all of your partner's extra State Pension or lump sum if: they died while they were deferring their State Pension (before claiming) or they had started claiming it after deferring. they reached State Pension age before 6 April 2016. you were married or in the civil partnership when they died.
Inflation risk
Some pensions are increased periodically and linked to inflation. A change in inflation could lead to a change in pension funded status and required contributions if assets are not also linked to inflation.
The top ten financial mistakes most people make after retirement are:
From 20 September 2025, the full pension is available, under the assets test, for homeowner singles whose assessable assets are under $321,500 – for homeowner couples the number is $481,500. The numbers for non-homeowners are $579,500 and $739,500 respectively.