Flexible pension withdrawals have continued to rise, exceeding £124.7 billion since the pension freedoms were introduced in 2015.
HM Revenue & Customs’ annual private pension statistics show a total of £22.4 billion in taxable payments was withdrawn from pensions flexibly in the 2025/26 tax year, marking a new record.
This has increased from £18.6 billion in the previous financial year and £15.3 billion in 2023/24.
The statistics show that in the first quarter of this year, £5.9 billion of taxable payments was withdrawn from pensions flexibly by 770,000 individuals across 1.9 million payments, with an average withdrawal of £7,700 per person. It represents an 18% increase in the value of payments withdrawn in this quarter compared to the same quarter in 2025 and a 15% increase in the number of individuals withdrawing.
Maurice Titley, commercial director, data and dashboards at Lumera, said: “Total flexible withdrawal values continue to rise, and increasing numbers of individuals choose this route when first accessing their pension, however, there is little evidence here about how sustainably members are accessing their pension capital.
“That matters given many people already underestimate how much they need to save for a comfortable retirement, and the pace at which they draw down their pension can have a significant impact on how long their savings last.
“While some people will be accessing their pots as part of a carefully planned retirement strategy, others may not fully consider the longer-term impact on their retirement income. There is also a potential tax trap – taking a large sum in one go can push someone into a higher tax band, leaving them with an unexpectedly large tax bill.”
Titley said the figures reinforce why policymakers are shifting their focus beyond simply giving people more choice towards helping more savers achieve better retirement outcomes.
Titley added: “Reforms such as Guided Retirement have the potential to help millions of disengaged scheme members achieve sustainable pension incomes, and the introduction of Targeted Support will help to nudge individuals appropriately during their saving journey, without them having to request personalised financial advice.
“However, delivering those reforms successfully will depend on the quality of member data and the technology underpinning pension schemes. Providers and trustees will increasingly need to make evidence-based decisions about appropriate retirement pathways at scale using the information they hold on members. That requires robust governance, accurate data and flexible technology platforms that can adapt to changing regulation while supporting more guided retirement journeys.”
David Brooks, head of policy at Broadstone, commented: “The continued growth in taxable pension withdrawals is to be expected given the growing number of people reaching retirement with defined contribution pension pots.
“However, the 18% annual increase in the value withdrawn during the first quarter of 2026 compared to the previous year is striking and suggests that financial pressures may be encouraging savers to access more of their pensions.
“The true concern is that we have little conclusive evidence to gauge how savers are accessing their pensions and whether they are doing so in a sustainable way. Pension freedoms provide valuable flexibility but inevitably increase the risk that savings are depleted too quickly, particularly where people underestimate how long their retirement may last.”
