Your 'treasure' chest

FIVE-MINUTE GUIDE TO... TAX-FREE CASH

- By Harvey Jones

ONE OF the most popular retirement perks is tax-free cash, officially known as the pension commencement lump sum.

It allows savers to withdraw up to 25% of their pension pot free of income tax, up to a maximum of £268,275.

For many, this is the golden ticket that lets them clear the mortgage, pay down debts or fund a long-awaited holiday.

It is a hugely popular benefit that has now become the subject of pre-Budget speculation, amid rumours that Chancellor Rachel Reeves will trim it back to save money.

Talk is growing that she could impose a cap of £100,000, a move that would mostly hit those with larger pots rather than ordinary savers.

A word of warning: exactly the same idea circulated before the last Budget but never materialised.

Some nervous retirees rushed to take money out just in case, only to regret it afterwards.

That underlines the danger of acting on speculation.