The number of people accessing pension pots worth more than £250,000 increased by 68 per cent in 2024/25, figures from the Financial Conduct Authority (FCA) have revealed.

Large pension pots accessed and taken into drawdown without being fully withdrawn increased from 34,832 between April 2023 and March 2024 to 58,544 between April 2024 and March 2025.

Consultancy LCP highlighted that the increase in the six months between April and September 2024 coincided with fears that the first Budget under the new Labour government would increase measures such as capping or scrapping tax-free lump sums.

The figure increased further in October 2024 to March 2025, which LCP said was likely in response to the Budget announcement that pensions would come into scope of inheritance tax (IHT) from April 2027.

“These figures show graphically how uncertainty about pensions and tax can move the market,” commented LCP partner, Steve Webb.

“In the six months before the October 2024 Budget there was a surge in larger pension pots being accessed, mainly because of fears about reductions in limits on tax free cash. But after the Budget, where there was no change to tax free cash, withdrawals of large pots accelerated.

“This is likely to reflect the change in pensions and IHT, with people starting to explore ways of moving money out of the IHT net ahead of the 2027 changes.

“Given that pensions should be a long-term business, it is deeply disappointing that consumer behaviour is being driven so profoundly by uncertainty around public policy.”

Overall, more than £53bn was taken out of pension pots in the 12 months to March 2025 from pensions that were taken into drawdown but not fully withdrawn.

Furthermore, tax-free pension withdrawals rose by 63 per cent over the same period, from £11.3bn in 2023/24 to £18.3bn in 2024/25.

The FCA data also showed just 30.6 per cent of people sought regulated advice before accessing their pensions in 2024/25, down slightly on the previous year.

“With nearly seven in 10 making complex decisions without professional help, there is a real risk of retirees taking unsustainable withdrawals or making choices that could undermine their long-term financial security,” said Quilter head of retirement policy, Jon Greer.

“Worryingly, the FCA’s data shows that most people in drawdown are taking regular withdrawals of more than 8 per cent a year, levels at which pots are unlikely to last.

“This is exactly where reforms to deliver simplified advice and targeted support can make a difference, giving people accessible, timely guidance that steers them towards more sustainable decisions without forcing them into a full advice process if they don’t need it.”

---