UK pension withdrawals surge to £91bn amid tax uncertainty

Pension withdrawals in the United Kingdom have surged to £91.2 billion in 2025/26, according to new figures from the Financial Conduct Authority. This represents a 21.7% increase from the £75 billion withdrawn the previous year and a 70% rise compared to the £53.6 billion recorded in 2023/24.

The data indicates that while the number of pension plans being accessed for the first time rose by 7.4% to over one million, the total value withdrawn grew much faster. This suggests retirees are drawing larger sums from their accounts. Notably, the number of individuals with pension pots worth £250,000 or more entering drawdown more than doubled from 34,712 in 2023/24 to 75,968 in 2025/26.

Experts attribute this trend to uncertainty regarding government tax policies. Specifically, savers are reacting to the planned introduction of inheritance tax on most unused pension funds and death benefits, which is set to take effect in April 2027. Steve Webb, a partner at LCP, noted that while some speculation regarding caps on tax-free cash was unfounded, the looming inheritance tax changes are already significantly impacting retirement planning.