What is the 25% pension tax-free cash - and when should you take it?

The 25% tax-free cash that savers can take from their pension pots got plenty of airtime in the run-up to the Autumn Budget, with speculation that it could be cut or axed. But, what is it and how does it work?

Piggy bank next to coins and sign saying Pension Plan
(Image credit: Getty Images)

Pension savers breathed a sigh of relief last month when chancellor Rachel Reeves chose not to make any changes to the 25% tax-free cash in her Autumn Budget.

There had been speculation that the maximum amount of tax-free cash that pension savers could take would be cut, or even axed altogether. Other rumours included tweaking pension tax relief.

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Ruth Emery
Contributing editor

Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.

She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. 

A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. 

Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.