Savers withdrew £22.4bn in taxable flexible pension payments during 2025/26, up from £18.6bn in 2024/25 and £15.3bn in 2023/24, according to the latest HMRC statistics.

The figures showed that the total value of taxable payments withdrawn flexibly from pensions since the introduction of pension freedoms in 2015 has now exceeded £124.7bn.

Between January and March 2026, £5.9bn was withdrawn by 770,000 individuals across 1.9 million payments, with an average taxable withdrawal of £7,700 per person.

This represented an 18 per cent increase in the value withdrawn compared with the same quarter in 2025, alongside a 15 per cent rise in the number of individuals making withdrawals.

The statistics also showed a gradual change in the age profile of people making flexible withdrawals.

In 2016/17, people aged between 55 and 59 received 42 per cent of the total value withdrawn, compared with 29 per cent for those aged 65 and over.

By 2025/26, the share received by the 55-59 age group had fallen to 23 per cent, while those aged 65 and over accounted for 46 per cent.

Broadstone head of policy, David Brooks, noted the increase in withdrawals reflected the growing number of people reaching retirement with defined contribution (DC) pension pots, but warned that the scale of the latest rise was notable.

“The continued growth in taxable pension withdrawals is to be expected given the growing number of people reaching retirement with DC pension pots," he said.

“However, the 18 per cent annual increase in the value withdrawn during the first quarter of 2026 compared to the previous year is striking and suggests that financial pressures may be encouraging savers to access more of their pensions.”

“The true concern is that we have little conclusive evidence to gauge how savers are accessing their pensions and whether they are doing so in a sustainable way,” he continued.

“Pension freedoms provide valuable flexibility but inevitably increase the risk that savings are depleted too quickly, particularly where people underestimate how long their retirement may last.”

Separately, HMRC estimated that the cost of income tax relief on pension contributions and investment income rose from £47.8bn in 2022/23 to £60.4bn in 2024/25.

Income tax collected from registered private pension payments also increased, rising from £21.9bn to £30.1bn over the same period.

LCP partner, Steve Webb, commented on the latest figures: “The constant freezing of tax thresholds and allowances has dragged millions more people into paying higher rates of income tax.

“The flip side of this is that when they pay into a pension they get more tax relief, leading the cost of tax relief to soar.

“But frozen personal allowances mean that the number of pensioners paying income tax has also risen steeply, and the tax bill on pensioners is up dramatically.”

Webb argued that, although the rising cost of pension tax relief could attract political attention, major reform remained unlikely in the near term because of the complexity and limited short-term revenue gains involved.

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