Pension withdrawals surge by 36% to £70.9bn as more savers access pots – FCA

The Financial Conduct Authority (FCA) released its latest Retirement Income Market Data, showing pension withdrawals rose by 36% to £70.9bn in 2024/25, up from £52.2bn the previous year. 

The number of pension plans accessed for the first time increased by 8.6% to 961,575, compared to 885,455 in 2023/24.

Sales of drawdown policies climbed by 25.5%, rising from 278,977 to 349,992. 

Annuity sales went up by 7.8%, with 88,430 sold in 2024/25 compared to 82,061 last year. 

The total value of money taken from pension pots increased from £52,152m to £70,876m, up 35.9%.

30.6% of first-time accessed pension plans were by holders who took regulated advice, slightly down from 30.9% in the previous year. 

Defined benefit to defined contribution transfers dropped again, falling from 7,181 to 6,418.

Rob Hillock, head of personal financial planning at Broadstone, said: “Today’s data shows a significant surge in savers accessing their pensions with nearly £20 billion more withdrawn in 2024/25 compared to the previous year, a 36% rise.

“While demographic changes would suggest that increasing amounts of pension money will be accessed year-on-year, the size of this year’s jump suggests additional behavioural changes may well be at play. 

“Reforms such as the inclusion of pension assets in Inheritance Tax may be encouraging more savers to spend their pension or front-load withdrawals.”

Hillock added: “Unfortunately, it also indicates that many of the rumours around the 2024 and 2025 Autumn Budgets could also be impacting how savers access their pension. 

“For example, tax-free pension lump sum withdrawals were reported to have risen significantly amid fears this allowance could be reduced or scrapped.

“While drawdown sales saw the biggest increase, annuities continue to increase in popularity as elevated rates and the security of guaranteed income, alongside increasing flexibilities, encourage more savers to explore this option.”