Merryn Talks Money We Speak to the Pensions Expert Who is Taking His Tax-Free Cash Now
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Oct 8, 2025 In this engaging conversation, pensions expert Tom McPhail shares insights from his wealth of experience, including his decision to take tax-free pension cash now, revealing both personal motivations and broader political contexts. He discusses potential risks of future cuts to pension tax breaks and how reinvesting outside pensions, such as through ISAs, could be a better financial strategy. The duo also explores recent inheritance tax changes, the government's focus on taxing wealth, and the pressing need for coherent tax reform.
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Taking Tax-Free Cash Early
- Tom McPhail decided to take his 25% tax-free pension lump sum now because he expects future cuts to pension tax breaks.
- He and his IFA modelled scenarios and concluded reinvesting into ISAs would likely leave him better off.
Pensions Are Prime Tax Targets
- The current fiscal context makes pension tax-free cash vulnerable to cuts more than at any time in Tom's career.
- High deficit and debt-to-GDP levels increase the political appetite to tax pension wealth.
Frozen Lump-Sum Limits Change The Math
- McPhail can't increase his own tax-free pension cash because the lump-sum limit is frozen.
- Future pension growth for him will be taxable, reducing the upside of leaving money in pensions.