The latest Retirement Income Market Data released this morning by the FCA shows a notable increase in the amount of money being withdrawn from pensions, rising by 36% to £70.9 billion in 2024/25 from £52.2 billion the previous year.
Sales of drawdown policies saw the biggest increase from 278,977 in 2023/24 to 349,992 in 2024/25 (25.5%), with sales of annuities rising 7.8% from 82,061 in 2023/24 to 88,430 in 2024/25.
Rob Hillock, Head of Personal Financial Planning at leading independent financial services consultancy Broadstone, commented:
“Today’s data shows a significant surge in savers accessing their pensions with nearly £20 billion more withdrawn in 2024/25 compared to the previous year, a 36% rise.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.
“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.”
