Over £91bn was withdrawn from pensions in 2025-26 – up 21.7% from the previous year.
But experts are concerned that speculation around pension policy has caused a surge in withdrawals.
Here, we explore how people take their pension, and we explain what you need to know about your retirement choices.
Drawdown sales continue to rise
Drawdown is where you keep your pot invested but can withdraw money whenever you choose.
This approach now accounts for 38% of all pots accessed for the first time last year.
Drawdown sales have continued to rise after soaring in popularity in recent years: the number of pensions accessed via drawdown has increased by 10.5% since 2025-26.
While nearly half of all pensions accessed for the first time last year were fully cashed in, making it the most popular method of accessing a pension ahead of drawdown, the majority of these pots contained less than £10,000.
This chart shows the number of pensions accessed for the first time, by the method of access since 2021-22.
How pensions are first accessed
Find out more:The risk of draining your pot
The flexibility of drawdown is clearly a huge draw for savers: you can take money from your pension as and when you need it. That leaves the rest invested, with the potential for it to benefit from further growth.
The flip side is that you risk running out of money if you take too much from your pension or if your investments underperform. And the FCA data shows that many could be at risk of draining their pots faster than intended.
But making your pension last through retirement requires careful consideration: the right rate for you will depend on a range of factors, including your investment strategy, the size of your pension pot, how long you expect to live and whether you have any other sources of income.
Think carefully before taking tax-free cash
Around £22bn was taken from pensions in tax-free cash in 2025-26, according to the FCA’s figures, up 21% on 2024-25.
According to analysis by wealth management firm Evelyn Partners, more than £40bn was taken in tax-free lump sums between April 2024 and March 2026 – more than double the amount taken in the two years prior.
But you should think carefully before taking cash from your pension, especially if you don’t have a plan for how you’ll use the money.
Leaving your pension invested gives it the chance to grow. As your pension grows, so does the amount you can take as tax-free cash.
And you could end up with a tax bill if you put the money into a savings account or invest it elsewhere and exceed your personal savings and Isa allowances.
You should be careful not to breach HMRC's pension recycling rules, designed to stop people re-investing tax-free cash into their pension to get extra tax relief. Breaking these rules can result in tax charges of up to 55% on your lump sum.
Is it time to consider an annuity?
Annuity sales jumped 13% on the previous year to 100,144 according to the FCA’s data – making up 10% of all the pensions accessed for the first time.
Annuity rates have improved considerably in recent years and reached record highs in the past few weeks. Today, a 65-year-old with a £100,000 pension could get over £8,000 a year, compared with less than £5,000 five years ago, according to Hargreaves Lansdown.
Buying an annuity removes the uncertainty from retirement planning, as you know exactly how much income you’ll get from your pension each year, and for how long.
But it's an irreversible decision, so you should take time to carefully consider your options, the types of annuity available and to shop around for the best rates.
Find out moresource https://www.which.co.uk/news/article/pension-withdrawals-surge-to-91-billion-how-should-you-access-your-retirement-savings-aSxMr4Q1vAoy