Why does untaxed interest on savings effect tax code

I retired in May 2023. I have not drawn any income from pension or work since and I don't owe any tax. I recently withdrew a small nominal amount from my pension in order to allow the pension company to get my tax code. I had expected my tax code. to change from 1237L to 1257L, instead it dropped to 1137L. It seems to be because the untaxed interest on savings assumption has gone up. What I don't understand is why. As I understand it taking into account my personal savings allowance, plus the starting rate for savings, means I will not owe ant tax on savings in 2024/2025. Why has this impacted my tax code. Any advise appreciated.

Hi Ian1 Smith,
This is to demonstrate the amount of untaxed interest received.
Should your pension income increase to the point where this coding deduction for untaxed interest starts to cause you to owe tax, the £1000 tax-free Savings Allowance and £5000 Starting Rate for Savings would then automatically be applied.
In short, this reduction in code would not usually cause you to owe more tax.
If you would like us to review your code, though, please contact us by webchat or phone here:
Income Tax: general enquiries
Thank you.