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More than £91bn was withdrawn from pensions in 2025-26, a 21.7% rise on the previous year, according to Financial Conduct Authority data cited by Which?. Drawdown accounted for 38% of first-time pension access, while many drawdown pots were being withdrawn from at rates above 8% a year. The figures do not establish why withdrawals rose or how long savers’ money will last.
More than £91bn was withdrawn from pensions in 2025-26, up 21.7% on the previous year, according to Financial Conduct Authority figures reported by Which?. More than 1 million pensions were accessed for the first time, highlighting the growing number of savers making decisions about how to turn retirement pots into income.
Drawdown, which allows people to keep their pension invested while taking withdrawals, was used for 401,137 pensions in 2025-26. That represented 38% of pots accessed for the first time. Nearly half of newly accessed pensions were fully cashed in, though most of those pots held less than £10,000, Which? reported using FCA data.
The figures also show that withdrawals from drawdown pots can be substantial. About 320,762 pensions in drawdown were being accessed at an annual rate above 8%, around half of all such pensions in the FCA data. Which? says 4% is often cited as a withdrawal rate for a pot intended to last about 30 years, but that is not a guarantee or a personal recommendation.
Withdrawals taken as tax-free cash reached about £22bn in 2025-26, 21% more than in 2024-25. The report says savers can generally take up to 25% of a pension tax-free, subject to a usual maximum of £268,275. The amount and tax treatment available can depend on individual circumstances and pension rules.
Rising withdrawals put income plans under pressure
The figures matter because a pension pot has to support spending across retirement, potentially for decades. Taking money quickly can reduce the amount left invested and available for later years. With drawdown, the remaining pot may grow, but its value can also fall if investments perform poorly.
Which? warns that withdrawals above 8% a year could put some savers at risk of exhausting their pots sooner than intended. The data does not say how many people will run out of money, and a suitable withdrawal rate varies with pot size, investment choices, lifespan and other income. Unexpected costs, including later-life care, can also affect how long savings last.
The reported increase in tax-free cash withdrawals also puts attention on the timing of lump-sum decisions. Taking cash without a clear use for it may mean losing the opportunity for the money to remain invested inside the pension. Cash held elsewhere may also have tax consequences depending on savings interest, allowances and personal circumstances.
How savers are accessing pension pots
The FCA data covers retirement income choices in 2025-26, including pensions accessed for the first time and withdrawals from pots in drawdown. A defined contribution pension gives a saver a pot whose value depends on contributions and investment performance. At retirement, the saver must decide how to use that pot; the choice differs from a defined benefit pension, which typically promises an income based on scheme rules.
Under drawdown, a saver leaves some or all of the pension invested and takes money as needed. Another option is to cash in a pot, either as a small-pot lump sum or through other lump-sum routes. Which? notes that drawdown generally involves an annual platform or product fee and charges on investments, so costs can reduce returns.
The report links rising withdrawals in part to more defined contribution savers reaching retirement age. It also says speculation about possible pension policy changes may have influenced some decisions. Evelyn Partners analysis cited by Which? found that more than £40bn in tax-free lump sums was taken between April 2024 and March 2026, more than double the amount in the preceding two years. That analysis describes the amounts withdrawn; it does not by itself establish why each saver acted.
“320,762 pensions – around half of all those in drawdown – were accessed at an annual rate of over 8%.”
— Which?
What the withdrawal data cannot show
The published totals do not identify the reason for each withdrawal or show whether savers later regretted taking cash. Which? reports concerns that speculation about pension policy and inheritance tax may have prompted some people to withdraw money, but the figures alone do not prove that link.
The data also does not establish whether an individual’s withdrawal rate is sustainable. The commonly cited 4% figure is a rule of thumb for a particular time horizon, not a guarantee; outcomes depend on returns, fees, inflation, spending needs and how long someone lives. The source material does not provide a breakdown of future outcomes for the pots being accessed at rates above 8%.
Which? describes speculation that the pension commencement lump sum could be scrapped or capped, but the material provided does not confirm a policy change or set out its timing. Individual tax treatment can also vary, including under rules on recycling tax-free cash into pension contributions.
Review choices before taking withdrawals
Savers approaching retirement or already using drawdown can review how much they plan to withdraw, the charges on their investments and the other income available to them. They may also want to consider whether a lump sum has a specific purpose and how money taken from a pension would be held or invested. The FCA figures do not prescribe a single approach for everyone.
People considering tax-free cash should check the current rules and how a withdrawal could affect future pension contributions or tax. Which? warns that HMRC’s pension recycling rules can apply when tax-free cash is paid back into a pension to obtain extra tax relief; breaches can result in tax charges. The report advises savers to get guidance if they are unsure how the rules apply.
Further FCA retirement income data and any confirmed policy announcements will help show whether the withdrawal trend continues. Until then, the reported figures describe withdrawals in 2025-26; they do not establish how much income future retirees will need or what return their investments will earn.
Key Questions
How much was withdrawn from pensions in 2025-26?
More than £91bn was withdrawn, up 21.7% from the previous year, according to FCA data cited by Which?.
What is pension drawdown?
Drawdown lets someone keep pension savings invested and take withdrawals from the pot. Investment values can rise or fall, and withdrawals reduce the money left in the pot.
How much tax-free cash can someone usually take?
Which? says people can generally take 25% of a pension tax-free, usually up to a maximum of £268,275. Personal circumstances and pension rules can affect the amount available.
Is withdrawing 4% a year guaranteed to make a pension last?
No. Which? describes 4% as a rate often cited for a pot intended to last about 30 years. It is not a guarantee; sustainability depends on factors including investment performance, fees, spending and lifespan.
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