Pension withdrawals surge 20% in 2023/24

Savers took more than £52bn from their pensions in the 2023/24 tax year, a 20% increase on the year before, according to Financial Conduct Authority data reported on 4 October 2024¹. The number of pension plans accessed for the first time rose by 20% to 885,455 over the same period¹.

"Pension withdrawals surged by 20% in 2023/24, with savers cashing out more than £52 bn, according to new data from the Financial Conduct Authority (FCA)."

Which?, 4 October 2024¹

The figures cover the options for taking money from a pension that became available after the 2015 rule changes, when it became possible to take an entire pension fund as cash from age 55¹. The minimum age for accessing a pension is 55, rising to 57 in 2028, though earlier access can apply in circumstances such as ill health or where a protected pension age exists¹.

Drawdown remained the most popular route, with nearly 280,000 savers choosing it in 2023/24, a 28% increase on the previous year¹. Annuity sales rose by 39% to 82,061, which the report attributes largely to higher interest rates¹.

Measure	2023/24	Change on 2022/23
Total withdrawn	More than £52bn	Up 20%
Plans accessed for the first time	885,455	Up 20%
Drawdown users	Nearly 280,000	Up 28%
Annuity sales	82,061	Up 39%
First-time users taking regulated advice	30%	Down from 32%

Only 30% of plan holders accessing a pension for the first time in 2023/24 took regulated financial advice, down slightly from 32% the previous year¹. Free and impartial guidance is available from services including Citizens Advice, Money Helper and Pension Wise, the last for those aged over 50¹.

Why it matters for households

The data describes how people with defined contribution pension pots, generally those aged 55 and over, used them during the 2023/24 tax year. Withdrawals are taxed as income once any tax-free element is used: the first 25% of a pot is tax-free, while the rest is added to the saver's income and can push them into a higher income tax bracket¹. Not all providers offer full cash withdrawal, and charges may apply¹.

Taking taxable income flexibly also triggers the money purchase annual allowance, cutting the amount that can be contributed tax-free each year from £60,000 to £10,000¹. The allowance is triggered by taking an uncrystallised pension lump sum or by drawing an income through drawdown; taking only a 25% tax-free lump sum and either buying an annuity or starting drawdown without taking an income does not trigger it¹.

The report links the rise in first-time access to cost of living pressures and higher interest rates, and notes that drawdown requires management to avoid depleting funds too early, while annuities provide a guaranteed income for life¹. It also notes that the two can be combined¹.