The newsletter also showed 15,274 forms were submitted during this period, including 9,694 P55 forms, 4,409 P53Z forms and 1,171 P50Z forms. This will mean nothing to a small number of specialists, if these are required to get paid a retirement income fast then drawdown will become beyond the tax capabilities of most people. It leaves drawdown a specialist product for those who have tax specialists or have an understanding of pension tax;

Analysis of HMRC’s figures conducted by AJ Bell revealed the average reclaim amounted to £2,881. It also found over £1.4bn has been reclaimed by savers overtaxed on pension withdrawals since the introduction of pension freedoms in 2015.

This is a sizeable amount but it is much less than the tax would have been paid if there was a default decumulator that paid simpler and as pensions pay tax.

What a load of holy!

I am quite sure that AJ Bell and Quilter are right when concluding that if you want to drawdown your pension, you should use a professional to get your paper work right.Tom Selby in Professional Pensions speaks on behalf of AJ Bell

“These figures are likely to be only the tip of the iceberg, however, as they only capture those who fill in the relevant HMRC reclaim form. In reality, many more people will use the quicker process of reclaiming the money they are owed. As a result, they will be reliant on HMRC putting their affairs in order at the end of the tax year.

“HMRC has offered a glimmer of hope to those who take a regular drawdown income. From April 2025, the government improved its tax code process so these people will be moved from an emergency code to paying the right amount of tax more quickly. But that doesn’t help those taking a one-off withdrawal who will continue to be overtaxed.”

Selby continued: “We have only just blown out the candles on the cake celebrating ten years of pensions freedoms. It is simply unacceptable that after all this time the government has still not managed to adapt the tax system to cope with the fact Brits are able to access their pensions flexibly from age 55, instead persisting with an arcane approach which hits people with an unfair tax bill, often running into thousands of pounds, and requires them to fill in one of three forms if they want to get their money back within 30 days.”

Quilter retirement specialist Jamie Clark added: “HMRC’s new tax coding process should not only reduce the administrative burden on savers, but with hope it will also minimise the number of overpayments being made in the first place.

“Nonetheless, pension withdrawals will remain a challenge. Many people are still reliant on their pension savings to manage financial pressures, and any hasty decision to access these funds could not only result in unintended – and often unexpected – tax consequences, but they could also hamper longer term financial plans.

There is a lot to be said for Quilter, AJ Bell and other drawdown providers who offer a niche product for the more sophisticated middle class. But there are many who have no wish to get involved in these kind of tax questions.

Over the weekend I wrote a simple answer to questions made to me by a senior question. I know that her readers are for often middle-class and sophisticated and read the financial pages to understand pensions. My only answer to the questions put to me was to be as honest as I could and stop making it a conversation about tax.

Pensions should not be bothered about the taxation of their pensions- and too often they are, whether it be the tax mentioned above, inheritance tax or more abstruse taxation questions.

We need a default method of drawing pots as pensions without these bothers, I hope that the DWP and HMT will have done their work since Labour got back in last summer.