The FCA’s Retirement Income Market Data publication has shown 320,762 pension plans were accessed at an annual rate of withdrawal of 8% or more in the 2025/26 tax year.
This accounted for 46% of the total number of pensions where regular withdrawals were made, and represents an increase of 24% year-on-year.
The total value of regular pension withdrawals through the year was £11bn.
Over 15% of pension pots of £250,000 or larger and more than a third (36%) of those between £100,000 and £249,000 were withdrawn at 8% or over.
In terms of pension holders’ age, half (50%) of those aged 55-64 are making regular withdrawals at an annual rate of 8% or higher.
The total number of pensions accessed for the first time increased by 7.4% to 1,047,008, versus 974,990 in the previous year.
David Brooks, head of policy at consultancy Broadstone, said: “The headline figure of around a third of a million pensions being withdrawn at rates of 8% or higher will inevitably raise questions about long-term sustainability.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.
“However, this data only tells us how much is being withdrawn, not whether those withdrawals are appropriate,” he added.
“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.
“What this data does highlight is the growing need for better support at retirement.”
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Andy Zanelli, head of technical engagement at Aberdeen Adviser, said: “First-time access has now surpassed one million plans a year, and the rate of growth continues to outpace anything happening on the supply side of the advice market.
“With adviser numbers flat at around 31,000 and firm numbers falling, it’s clear that a rising share of these decisions risk being taken either without professional support, or with support that falls short of full regulated advice.
“Slower growth of 10% in the number of pots entering drawdown after a larger increase the previous year looks like normalisation rather than any change in consumer preference, and drawdown remains the destination for the clear majority of pots being accessed for the first time.”
