Pension savers withdrew more than £91bn from their retirement pots in 2025/26, according to the FCA’s latest Retirement Income Market Data.
That’s an increase of 22% compared with the previous year and more than double the amount taken in 2022/23.
Drawdown continued to be the most popular retirement income solution, with a surge in sales of drawdown policies over the latter half of 2025/26 pushing the total for the tax year above 400,000.
Sales of annuities also increased by 13% in 2025/26, breaking the 100,000 barrier, according to the data.
The data found that 320,762 pension plans were accessed at an annual rate of withdrawal of 8% or over in 2025/26.
That accounted for 46% of the total number of pensions where regular withdrawals were made through 2025/26 and marked an increase of 24% year-on-year from the 259,507 pots accessed at an annual withdrawal rate of 8%+ in 2024/25.
David Brooks, head of policy at Broadstone, said: “The headline figure of around a third of a million pensions being withdrawn at rates of 8% or higher will inevitably raise questions about long-term sustainability.
“For some retirees, particularly those relying heavily on defined contribution savings to fund retirement, withdrawal rates at this level may increase the risk of exhausting their pension pot earlier than expected.”
He added that the data only tells us how much is being withdrawn, not whether those withdrawals are appropriate. “Some retirees will have other sources of income or wealth, while others may be deliberately drawing down pension savings over a shorter period rather than planning for a retirement lasting several decades.”
Looking at the annuity figures, Adam Cole, retirement specialist at Quilter, said: “After years in the wilderness following the introduction of pension freedoms, higher interest rates and gilt yields have transformed annuity rates, allowing retirees to secure significantly higher levels of guaranteed income than was possible just a few years ago.
“Against a backdrop of market volatility, inflation uncertainty and concerns about making retirement savings last, it is perhaps unsurprising that more people are choosing to lock in a secure income stream for life rather than take on all the investment and longevity risk themselves.”
But he said the data also highlights a continuing challenge. “More than half of annuity purchases are still made without either regulated advice or guidance, despite the irreversible nature of many of these decisions.”
Rachel Vahey, head of public policy at AJ Bell, said: “The concern is that people aren’t making decisions based on what’s best for them, but because they are worried about rumours of changes to pension tax incentives from the government or planned changes in tax rules.”
She warned: “Unless people make decisions based on their long-term retirement strategy, they could find themselves in later life having to rely on a much smaller retirement.”