The proportion of pensions being drawn at a rate of 8% or over has hit a record level for pots of all sizes, according to analysis of the latest Financial Conduct Authority data by Broadstone.
Broadstone analysed the figures from the last eight years in the FCA’s Retirement Income Market Data and found that nearly half (45%) of all pension pots were withdrawn at 8% or over in 2024/25.
It marks the highest proportion recorded and up two percentage points from 2023/24.
The proportion of pensions smaller than £10,000 accessed at 8% or over hit 84%, while a third (34%) of pots between £100,000-£249,000 were also being drawn down at 8% or over. Additionally, the data showed that even among the biggest pots of £250,000 and over, as many as one in seven (14%) are being withdrawn at over 8%.
The figure is double the 4% widely considered to be a sustainable withdrawal rate.
David Brooks, head of policy at Broadstone, said: “This data is cause for alarm in the sheer number of pots that are being drawn down rapidly by pensioners.
“While the data does not tell us whether these are retirees’ main pensions that they will rely on for retirement income, it is still startling to see such high numbers rising pretty consistently over the past eight years.
“Similarly, the data highlights current withdrawal behaviour but it does not capture how the rate of access evolves over the long term. Some individuals may be choosing to front-load income in early retirement or meet temporary financial needs, so the headline figures need not imply a permanent year-on-year pattern. The rising proportion does, however, suggest that this is a trend worth closely monitoring.”
Brooks said with pension freedoms just a little over ten years old, there is no tangible evidence around how people are managing their pension savings deep into retirement.
“This data raises the very real risk that many people are depleting their savings unsustainably and risk facing serious financial challenges later on in retirement,” he added.
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