Pension Withdrawals Surge

Pension withdrawals hit £91bn as savers react to upcoming tax rule changes.

Pension savers withdrew about £91 billion from pots accessed for the first time in 2025/26, up 22% from the previous year, as withdrawals continued to climb amid uncertainty over pension policy. Industry figures and advisers point to speculation about limits on tax-free lump sums and the planned inclusion of most unused pension funds in inheritance-tax estates from April 2027 as factors shaping decisions. Tax-free lump-sum withdrawals reached about £22 billion in 2025/26, bringing the two-year total to roughly £40 billion; advisers warn that some savers may have made irreversible choices that could reduce their retirement income or investment growth. Nearly half of plans with regular withdrawals were drawn down at 8% or more annually, raising concerns about whether some pots will last, though individual circumstances vary. Drawdown remained the most popular retirement-income option, while annuity sales also increased as higher rates made guaranteed income more attractive.

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