Birmingham Live: Pensioners face mortgage crisis over £100,000 cap on lump sum

Pensioners who had hoped to use a tax-free lumpsum from their pension pots to clear their mortgage could be hit by a crisis amid concerns that this amount might be capped at £100,000. There have been reports Chancellor Rachel Reeves is looking to slash the current tax-free limit people can draw from their retirement savings from £268,750 down to £100,000. Traditionally, retirees have utilised the tax-free sum for clearing lingering mortgage debts, funding essential home renovations or as financial aid to help out adult offspring break into the property market.

Harps Garcha, Director at Brooklyns Financial, said: "The potential changes to the Tax-Free Lump Sum policy could cause undue stress for many who had planned to use it to reduce their mortgage. For those nearing retirement, this sudden shift leaves limited options to adjust their financial plans, potentially forcing some to sell and downsize. This policy risks disproportionately impacting older individuals, who may now face unexpected financial challenges at a crucial time in their lives."

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