Almost seven million pension pots have been accessed for the first time since the introduction of freedom and choice in April 2015, estimates from AJ Bell have suggested, with drawdown now the most popular option amongst those with pots of £30,000 or more.

The analysis, shared ahead of the 10-year anniversary for the pension freedom reforms, showed that before freedom and choice was introduced, around 75 per cent of defined contribution (DC) pension pots were used to buy an annuity.

However, that has since "plummeted" to less than 10 per cent (2023-24) as annuities quickly fell out of fashion, with drawdown instead being the most popular option for savers accessing pots of £30,000 or more, used by 60 per cent last year.

Commenting on the findings, AJ Bell head of public policy, Rachel Vahey, said: “Next month we will be lighting the candles on the cake celebrating 10 years of pension freedoms.

"George Osborne’s 2014 Budget bombshell was a dramatic initiative which ripped up the rulebook and gave people more control over how they access their pension savings.

“A decade later, we can see the choices people made with their new-found freedom. Drawdown has surged in popularity to become by far the most popular retirement choice among those with pots of £30,000 or more."

In particular, AJ Bell found that drawing income of 8 per cent or more from a pension pot is common.

However, Vahey pointed out that those drawing down pensions at over 8 per cent largely reflects the number of small pots drawn down relatively quickly, with the average withdrawal rate falling to more moderate levels from larger pension pots.

“Among those with £100,000 or more in their pension pot, 65 per cent withdrew less than 6 per cent income last year, with 44 per cent taking under 4 per cent," she confirmed.

Drawdown was not the only popular choice, however, as AJ Bell found that many savers are still choosing to fully encash pensions.

However, AJ Bell pointed out that the "overwhelming majority" are small pots of under £30,000.

Indeed, Vahey said that, contrary to worries at the time, there is little evidence people rushed out to ‘blow’ their entire pension pot on luxury items like Lamborghinis.

"Instead, the Financial Conduct Authority (FCA) evidence shows those with larger pension pots are making sensible decisions using drawdown and annuities to make sure they have a decent income in retirement," she said.

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