In the latest tax year, (2025/26), £22.4 billion in taxable payments was withdrawn from pensions flexibly – marking a new record. This has increased by £3.8 billion from £18.6 billion total in the previous financial year (2024/25) and by £7.1 billion since 2023/24 when the total stood at £15.3 billion.
The total number of individuals withdrawing in 2025/26 also increased by 123,000 from 1.14 million people in 2024/25 to 1.27 million people.
In Q1 2026, £5.9 billion of taxable payments was withdrawn by 770,000 individuals across 1.9 million payments. The average taxable withdrawal per person was £7,700 in this period. There was an 18% increase in the value of payments withdrawn in this quarter compared to the same quarter in 2025, and a 15% increase in the number of individuals withdrawing.
Separately DWP released their latest statistics on Workplace Pension Participation and Savings Trends, which again demonstrated the increasing percentage of individuals who receive a lump sum or other Defined Contribution product when they first access their pension, which has risen from 37% in the 2016/17 financial year to 49% in the 2025/26 financial year.
Maurice Titley, Commercial Director, Data & Dashboards at Lumera, said: “Total flexible withdrawal values continue to rise, and increasing numbers of individuals choose this route when first accessing their pension, however, there is little evidence here about how sustainably members are accessing their pension capital. That matters given many people already underestimate how much they need to save for a comfortable retirement, and the pace at which they draw down their pension can have a significant impact on how long their savings last.
“While some people will be accessing their pots as part of a carefully planned retirement strategy, others may not fully consider the longer-term impact on their retirement income. There is also a potential tax trap - taking a large sum in one go can push someone into a higher tax band, leaving them with an unexpectedly large tax bill.
"These figures reinforce why policymakers are shifting their focus beyond simply giving people more choice towards helping more savers achieve better retirement outcomes. Reforms such as Guided Retirement have the potential to help millions of disengaged scheme members achieve sustainable pension incomes, and the introduction of Targeted Support will help to nudge individuals appropriately during their saving journey, without them having to request personalised financial advice.
"However, delivering those reforms successfully will depend on the quality of member data and the technology underpinning pension schemes. Providers and trustees will increasingly need to make evidence-based decisions about appropriate retirement pathways at scale using the information they hold on members. That requires robust governance, accurate data and flexible technology platforms that can adapt to changing regulation while supporting more guided retirement journeys.”
HMRC Private Pension Statistics
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