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Pension withdrawals have soared by 70% in just two years, with new figures from the Financial Conduct Authority showing that £91.2 billion was withdrawn from pension pots in 2025/26, up from £75.0 billion the previous year and £53.6 billion in 2023/24.
The latest figures cover pension pots being accessed for the first time, meaning they provide a snapshot of how people are drawing on their retirement savings.
The FCA says the total value withdrawn increased by 21.7% in 2025/26 alone, while the number of pension plans accessed for the first time rose by 7.4% to more than one million.
Why are people rushing to take money out of their pensions?
The biggest shift can be seen among people with larger pension pots.
The number of people with pots worth £250,000 or more entering drawdown more than doubled, rising from 34,712 to 75,968.
The proportion of pots accessed for the first time that were worth at least £250,000 also increased, reaching 8.6% in 2025/26, compared with 7.2% the previous year and 4.8% in 2023/24.
Former pensions minister Sir Steve Webb, partner at pension consultants LCP, said the figures point to concerns over possible changes to pension taxation.
In particular, he highlighted fears over a possible cap on tax-free cash ahead of the 2024 and 2025 Autumn Budgets, as well as the planned introduction of inheritance tax on pensions from April 2027.
The Government's inheritance tax changes are due to bring most unused pension funds and death benefits into the value of an estate for IHT purposes from April 6, 2027.
Sir Steve said: “It is very worrying that uncertainties about government policy on tax and pensions seems to have driven very high levels of withdrawals from pension pots.
"The speculation around caps on tax free cash was unfounded, but this did not prevent people from rushing to access their pensions, potentially losing out on further investment returns as a result.
"And the imposition of IHT is a very real change which is already affecting people’s retirement planning. We desperately need a period of stability in government tax policy, as continuing uncertainty is destabilising and distorts people’s financial planning”.
The FCA data does not itself establish why people accessed their pensions, but the pattern among larger pots is highlighted by LCP as evidence consistent with concerns about tax treatment.
Pension savers face major tax change
The latest figures arrive as pension tax rules are already facing a significant change.
From April 2027, most unused pension funds and death benefits will be brought within the scope of inheritance tax.
This has particular relevance for people with larger pension pots who are considering how much to withdraw, leave invested or pass on to family.
However, taking money out of a pension is not automatically the right response to a tax change. Withdrawals can affect income tax, investment growth and the amount available for retirement.
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The FCA's latest figures show that 401,137 pension plans entered drawdown in 2025/26, up 10.5% from the previous year, while annuity purchases increased by 13.2% to 100,144.
The figures underline just how much money is now being moved out of pensions as savers make decisions about accessing their retirement cash.
For anyone considering a withdrawal because of upcoming tax changes, the FCA figures are a reminder that pension decisions can have long-term consequences and should be considered alongside individual tax and retirement circumstances.