New data from the Financial Conduct Authority (FCA) reveals that over £91 billion was withdrawn from pensions in 2025-26, marking a 21.7% rise from the previous year. During this period, more than one million pensions were accessed for the first time.
The increase is partly attributed to more savers with defined contribution pensions reaching retirement age. However, experts also suggest that speculation surrounding pension policy may have contributed to the surge in withdrawals.
Drawdown continues to be a popular method, with 401,137 pensions moved into drawdown in 2025-26. This represents 38% of all pots accessed for the first time last year. The number of pensions accessed via drawdown has increased by 10.5% since 2025-26.
While nearly half of all pensions accessed for the first time last year were fully cashed in, most of these pots contained less than £10,000. The FCA data indicates that around half of all pensions in drawdown, specifically 320,762, were accessed at an annual rate exceeding 8%. This rate is higher than the 4% often cited as a safe withdrawal rate for a pension to last approximately 30 years.
Around £22 billion was taken from pensions as tax-free cash in 2025-26, a 21% increase from 2024-25. This surge has occurred amid speculation that the pension commencement lump sum could be removed or capped.
Demand for annuities is also increasing, with sales jumping 13% on the previous year to 100,144. This accounts for 10% of all pensions accessed for the first time. Annuity rates have improved, with a 65-year-old with a £100,000 pension potentially receiving over £8,000 a year today, compared to less than £5,000 five years ago.