FCA data show a 75% jump in withdrawal values over two years, with more people accessing larger pots amid speculation over Budget changes to pensions
The total value withdrawn from UK pension pots rose 21.7% to £91.2bn in the year to 31 March 2026, according to the Financial Conduct Authority’s Retirement Income Market Data. The figure has climbed sharply in successive years, from £52.2bn in 2023/24 to £75bn in 2024/25 and now £91.2bn, a 75% increase over two years.
The data also points to savers accessing larger pots than before. Pots worth £250,000 or more accounted for 8.6% of those accessed in 2025/26, up from 7.2% the previous year and 4.8% two years earlier. The number of pots accessed for the first time rose 7.4% to 1.05 million, while tax-free lump sums taken from pensions climbed by more than a fifth to £22.1bn, building on a 63% rise the year before.
Drawdown activity also increased, with 401,137 schemes entering drawdown, up 10.5%, and 64.5% of those taking the tax-free pension commencement lump sum, up from 61.9% in 2024/25. Annuity purchases rose 13.2% to 100,144. Full encashment remains the most common route into a pension, accounting for 45.8% of pots accessed, down slightly from 47.4% the previous year, though the large majority of the 479,485 pots fully cashed in were worth less than £10,000.
Perhaps most notable for advisers is the sharp rise in high-rate withdrawals: 320,762 schemes were accessed at an annual withdrawal rate of 8% or more, up 24% on the previous year and now accounting for 46% of all pensions in regular drawdown. David Brooks, head of policy at Broadstone, warned this raises questions about long-term sustainability. “For some retirees, particularly those relying heavily on defined contribution savings to fund retirement, withdrawal rates at this level may increase the risk of exhausting their pension pot earlier than expected,” he said, while cautioning that the data alone cannot show whether individual withdrawals are appropriate, since some retirees have other sources of wealth or are deliberately drawing down over a shorter horizon.
Andrew Tully, technical services director at Nucleus, linked the surge directly to policy uncertainty, pointing to the government’s move to bring pensions within inheritance tax and speculation ahead of last year’s Budget about tax-free lump sums. “This has caused many people to access tax-free cash and income, potentially to gift to family or shelter from IHT,” he said. “It’s clear the changes will also drive behaviour, and that is demonstrated by the significant increase in people accessing larger pots, with people likely to withdraw more from pensions at younger ages and either spend, gift or shelter these increased withdrawals.” Tully added that “continuous ongoing policy changes drive poor customer outcomes” and called for a pensions system that is “consistent, stable and encourages long-term saving,” warning that policy instability, more than the changes themselves, is driving this kind of behaviour.
For UK wealth managers and advisers, the data underlines a live conversation many clients are already having: the temptation to act pre-emptively on tax speculation, even where doing so may not suit their individual retirement horizon or income needs. With withdrawal rates climbing fastest among those accessing larger pots and taking regular income above 8% a year, sustainability of income in later retirement is becoming as pressing a conversation as the tax planning driving the initial withdrawal.
