As many as 2.4 million people first took a taxable flexible pension payment when they were under the age of 65, following the introduction of pension freedoms in 2015.
Analysis of HM Revenue & Customs data by Lumera found this group of ‘early accessors’ accounts for 70% of the 3.42 million pension savers who have taken taxable payments from their pension pots.
A total of £75.5 billion has been taken from pensions as taxable flexible payments since 2015 by individuals who were under 65.
Lumera said that the number of under-65s taking a taxable pension payment rose by 7% from 602,000 in 2024/25 to 644,000 in 2025/26, with the total value of taxable payments to that group increasing by £1.1 billion over the same time period.
Importantly, these payments do not include the tax-free lump sum, which the firm said highlights “the scale of early pension access”, raising a question mark about the sustainability of drawdown levels and long-term retirement income security.
Peter Roos, chief commercial officer at Lumera, said: “Pension freedoms have given millions of people much greater flexibility over how and when they use their retirement savings but accessing a pension early can have important and sometimes overlooked consequences.
“The concern is not necessarily that people are accessing their pensions before 65 – for many, doing so will be entirely appropriate – but whether they fully understand the tax implications and the potential impact on their longer-term retirement income. Taking money out earlier also means losing the potential investment growth on those savings and leaving a smaller pot to support what could be several decades in retirement.”
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