Pension withdrawals hit new record in 2025 – HMRC

“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.

“These figures reinforce why policymakers are shifting their focus beyond simply giving people more choice towards helping more savers achieve better retirement outcomes. 

“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: 

“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“However, the 18% annual increase in the value withdrawn during the first quarter of 2026 compared to the previous year is striking and suggests that financial pressures may be encouraging savers to access more of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.”