Retirees cashing in pension pots worth £100,000 or more paid at least £87.2m in tax over six months, analysis of Financial Conduct Authority (FCA) data by Standard Life has shown.

The figure related to the period between October 2024 and March 2025, and was over 20 per cent higher than the same period the previous year.

Standard Life said this highlighted how taking savings in one go can trigger unexpectedly high tax bills.

A total of 392 people fully withdrew pension pots worth at least £250,000, each triggering a minimum estimated income tax bill of £98,700.

A further 1,772 people fully cashed in pots worth between £100,000 and £249,000, each paying at least £27,400 in tax.

Standard Life noted that these figures were based on minimum estimates and focused on those who fully withdrew pots of £100,000 or more, and did not include tax paid on full withdrawals from smaller pots or regular withdrawals.

Any full pension withdrawal will result in anything above the 25 per cent tax-free lump sum usually treated as income, potentially pushing savers into higher and additional rate tax bands.

“Life doesn’t always follow a set path, and when people reach the point of accessing their pension, there are often a lot of competing priorities,” said Standard Life retirement savings director, Mike Ambery.

“For some, taking a larger amount upfront will feel like the simplest option, but it can come with a sting in its tail in the form of a higher tax bill than many expect.

“What catches people out is how quickly a single withdrawal can push them into higher tax bands.

“In some cases, a decision that feels straightforward in the moment can mean a significant portion of the money they’ve worked hard to build up ends up going to tax.”

Ambery added that tax was becoming an increasingly important part of how people think about their pensions, especially with changes to inheritance tax coming in April 2027.

“For some, this prospect may lead to decisions about accessing their savings earlier than they otherwise would have,” he continued.

“However, it’s important to weigh it up carefully - taking money out sooner can mean bringing forward income tax liabilities, and in some cases paying more than expected.”

---