Britain’s pension industry is facing a stampede of savers attempting to withdraw lump sums from their retirement pots amid rising fears of Rachel Reeves’ potential tax raid.

Standard Life, AJ Bell and Royal London are understood to be among the pension giants already receiving a surge in inquiries about tax-free withdrawals ahead of next month’s Budget.

Sir Steve Webb, a former pensions minister, said there is “widespread concern” among the public about the Chancellor possibly reducing the amount of tax-free cash that pension savers can withdraw.

He said: “Not unreasonably, those who are aged 55 or over are tempted to ‘crystallise’ their pensions now to get hold of their 25pc tax-free cash, and this surge in interest is likely to have put pressure on pension schemes and pension providers.”

Sir Steve, now a partner at consultancy LCP, noted that pension providers may also not have the extra staff needed to “cope with a rush” given how there isn’t usually a Budget in October.

Tom McPhail, of pensions consultancy the Lang Cat, also warned that some pension providers could face an operational “bottleneck” as savers overwhelm customer service teams with questions and withdrawal requests.

He said: “The Government’s created a context of uncertainty, discomfort and fear around all of this. Restricting the tax-free lump sum is an obvious potential tax raid. It’s quite an easy lever to pull.”

Experts fear that pension giants could be burdened with inquiries beyond the Budget if the changes are announced but don’t come into force until the next financial year.

It comes as the Chancellor faces calls to limit the amount of tax-free cash that savers can withdraw from their pensions, a move which could raise £2bn for the Treasury.

Current rules allow savers aged 55 and over to withdraw 25pc of any pension in a tax-free lump sum, up to a maximum of £286,275.

The Institute for Fiscal Studies this month urged Ms Reeves to reduce the maximum to £100,000, which would affect about one in five retirees.

The think tank also recommended overhauling how the tax relief operates so that those with larger pots and higher incomes do not benefit disproportionately.

Wealth managers have warned that changes to tax-free withdrawals would be destabilising for those in their late 50s and early 60s who have already earmarked funds in their retirement plans, such as paying off their mortgage.

Many are advising pension savers to avoid making a knee-jerk withdrawal, especially if they are planning to redirect the tax-free cash to a bank account with lower returns.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Ripping this out of your pension now to avoid a tax grab may seem like a good idea, but it’s something you may come to regret.”

It comes amid growing concerns among pension savers after Sir Keir Starmer warned that “tough decisions” will have to be made in next month’s Budget.

Downing Street has already announced plans to strip winter fuel payments from millions of pensioners, raising questions over whether similar policies will follow.

Rob Morgan, chief analyst at Charles Stanley, said: “I think people have taken that as a precedent to say, ‘OK, what other nasty surprises are there in this Budget?’”

Sir Steve hopes that the Government will outline a long-term strategy rather than changing pension rules to boost Treasury coffers in the short term.

He said: “The risk is that that doesn’t happen – that we get stuff done quickly to fill the [fiscal] hole, then next year things have not turned out as well as expected and they come back to pensions again, that would be the real worry.”

Although pension providers could now see a large number of funds flow out, industry experts believe it won’t cause material damage to their balance sheets.

Mr McPhail said: “It’s not like it’s going to suddenly bring down companies because of a massive outflow of cash. In the overall scheme of things, the amount of money flowing out as a result of these concerns is going to be relatively modest.”

Jason Hollands, managing director at Evelyn Partners, added that limiting lump sum withdrawals could be “good news” for pension firms as they would hang on to more assets under management.

A Treasury spokesman said: “We do not comment on speculation around tax changes outside of fiscal events.”