How people access their pots
Drawdown has become the most common way to access a pension, well ahead of annuities. In 2024/25, 961,575 pension plans were accessed for the first time, with 349,992 drawdown policies sold against 88,430 annuities, according to FCA data (FCA, Retirement income market data 2024/25, published 16 September 2025). Annuity sales have risen too, but from a much lower base.
| Access method | 2023/24 | 2024/25 |
|---|
| Plans accessed for the first time (all methods) | – | 961,575 |
| Drawdown policies sold | 278,977 | 349,992 |
| Annuities sold | 82,061 | 88,430 |
| Total value withdrawn (all methods) | £52,152m | £70,876m |
Source: FCA, Retirement income market data 2024/25, published 16 September 2025. The total value withdrawn includes tax-free cash and so exceeds the HMRC taxable-only total.
Drawdown sales rose 25.5% year on year, while annuity sales rose 7.8%, so the gap between the two widened further in 2024/25 (FCA, 2024/25). Drawdown keeps the pot invested and lets the holder vary income, whereas an annuity exchanges the pot for a set income, typically for life. Each carries different risks, and which suits a person depends on their circumstances, so it can be worth discussing the choice with an FCA-authorised financial adviser.
Two different totals. The HMRC and FCA figures measure different things. HMRC reports £18.6 billion of
taxable flexible payments in 2024 to 2025 (
HMRC, published 31 July 2025), while the FCA reports £70,876m withdrawn by all methods in 2024/25, including the 25% that is usually tax-free
Source: gov.uk, as at July 2026, subject to change. (
FCA, published 16 September 2025). Comparing the two directly can be misleading.
What the numbers mean
Taken together, the data suggests that flexible access is now the norm at retirement, that the sums involved are large and rising, and that most people who take a taxable withdrawal take a relatively modest amount, with an average of £7,400 per person in the first quarter of 2025 (HMRC, Jan to Mar 2025). A few observations, offered as general commentary rather than advice:
- Averages hide a wide range. A £7,400 average withdrawal covers everything from small regular top-ups to large one-off encashments, so a single figure can mask very different behaviour.
- Drawdown shifts risk to the saver. With drawdown now well ahead of annuities (FCA, 2024/25), more people carry the risk that their pot falls in value or runs down faster than expected.
- Tax can bite on large withdrawals. Because flexible payments above the tax-free element are taxable as income, a large withdrawal in one year may push someone into a higher tax band, which is one reason many people phase withdrawals.
- Pensions now interact with estates. Unused pension funds increasingly form part of what a family passes on, which connects the size of a pot to a household's inherited pensions position and its wider plan.
How any of this applies to a particular household depends on circumstances, and the figures change over time. Many people choose to discuss pension and estate questions together with a qualified professional, such as an FCA-authorised financial adviser for the pension itself and a solicitor or STEP practitioner for the estate.
Pension freedoms and inheritance tax from 2027
From 6 April 2027, most unused pension funds and death benefits will generally be brought within the value of a person's estate for inheritance tax, HM Treasury has confirmed (gov.uk, as at July 2026, subject to change). Because pension freedoms leave many people holding sizeable unused pots, this links how a pension is drawn, or left untouched, to a family's future tax position in a way it did not before.
Inheritance tax is charged at a standard 40% on the part of an estate above the available tax-free thresholds, with a reduced rate of 36% where at least 10% of the net estate passes to charity. The nil-rate band is £325,000 per person and the residence nil-rate band up to £175,000, so a married couple or civil partners may pass on up to £1,000,000 in some circumstances, with these thresholds frozen until the end of the 2030-31 tax year (5 April 2031) (gov.uk/inheritance-tax, as at July 2026, subject to change). Because a pension may now count towards that total from 2027, some people are reviewing how a pot sits alongside the rest of their estate. Our Inheritance Tax Explained guide covers the thresholds in more detail.
Pension freedoms changed how people take an income in retirement. From April 2027, they also change how an unused pot is treated on death, which is why the two are worth understanding together.
Sources and methodology
Every statistic on this page comes from a named official source and is dated to its reference period. The HMRC figures are drawn from its Private pension statistics, which report taxable flexible payments made to HMRC; HMRC notes that these figures are not comparable with those published before September 2023, because of methodological improvements. The FCA figures come from its annual Retirement income market data and measure how pension plans are accessed and the total value withdrawn, including tax-free cash.
- HMRC, Private pension statistics commentary (published 31 July 2025) (taxable flexible payments: £18.6bn in 2024–25, £15.3bn in 2023–24, £12.9bn in 2022–23, cumulative >£102.3bn since 2015, 672,000 individuals and £7,400 average in Q1 2025, and the sex and age splits). View source.
- FCA, Retirement income market data 2024/25 (published 16 September 2025) (961,575 plans accessed, 349,992 drawdown and 88,430 annuity sales, and £70,876m total value withdrawn). View source.
- gov.uk, Inheritance Tax on unused pension funds and death benefits (unused pensions within the estate for inheritance tax from 6 April 2027, as at July 2026, subject to change). View source.
- gov.uk, Inheritance Tax (nil-rate band, residence nil-rate band and rates, as at July 2026, subject to change). View source.
Frequently asked questions
How much have people withdrawn under pension freedoms?
The total value of taxable flexible payments withdrawn since pension freedoms began in 2015 has passed £102.3 billion, up to the first quarter of 2025, and reached a record £18.6 billion in the 2024 to 2025 tax year alone (HMRC, published 31 July 2025). These figures count taxable payments reported to HMRC and are subject to revision.
What is the average pension freedoms withdrawal?
In the first quarter of 2025, the average taxable flexible withdrawal was £7,400 per person, with 672,000 individuals making a withdrawal in that quarter (HMRC, Jan to Mar 2025). This is an average over a single quarter, so it can vary between periods, and it covers only the taxable part of withdrawals.
Do most people choose drawdown or an annuity?
Drawdown is far more common. In 2024/25, 349,992 drawdown policies were sold against 88,430 annuities, out of 961,575 pension plans accessed for the first time (FCA, published 16 September 2025). Both have risen, but the gap has widened. Which is suitable depends on circumstances, and can be discussed with an FCA-authorised adviser.
Are pension freedoms withdrawals taxed?
Usually up to 25% of a defined contribution pot can be taken tax free Source: gov.uk, as at July 2026, subject to change., and the rest of a flexible withdrawal is generally taxable as income at your marginal rate. This is why HMRC's £18.6 billion figure for 2024 to 2025 counts taxable payments only (HMRC, published 31 July 2025). A large withdrawal in one year can push income into a higher band, so many people phase withdrawals.
Will my pension be counted for inheritance tax?
From 6 April 2027, most unused pension funds and death benefits will generally be included in the value of an estate for inheritance tax, charged at a standard 40% above available thresholds such as the £325,000 nil-rate band (gov.uk, as at July 2026, subject to change). Some death-in-service benefits are outside the scope, and how this applies depends on individual circumstances.
Do these figures cover the whole UK?
The HMRC statistics cover taxable flexible payments reported to HMRC across the UK, while the FCA data covers regulated pension providers in the UK (FCA, 2024/25). Inheritance tax applies UK-wide, though some estate rules differ across UK nations. It is generally worth checking the coverage and definitions behind any single statistic before relying on it.
About Fairchild Oldfield
Fairchild Oldfield are estate planning specialists and will writers who help families in England and Wales with wills, trusts and later-life planning.
Fairchild Oldfield is not a firm of solicitors and is not a regulated financial adviser. This article is general information based on published official statistics, not legal, tax or financial advice.
Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales, and other UK jurisdictions may differ; the statistics cited cover the periods and geographies stated at each figure. Figures and rules are current as at July 2026 and are subject to change, and official statistics are subject to revision. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances.
