Quilter head of retirement policy Jon Greer
The number of people who withdrew money from their pension pot for the first time increased to 885,455 in 2023/24, latest statistics from the regulator reveal, however, there was a decline in the uptake of financial advice beforehand.
The Financial Conduct Authority's (FCA) retirement income data for 2023/24 reported an almost 20% increase in people accessing their pots for the first time. It said 885,455 people withdrew cash from their pensions compared to 739,652 in 2022/23.
However, analysis from Quilter pointed out that the number of people seeking regulated advice before dipping into their pots "continued to decline".
Head of retirement policy Jon Greer said that in 2023/24, just 30.9% of plan holders took advice, down from 32.9% in the previous year.
"This ongoing drop suggests that more people are navigating the complexities of pension withdrawals without professional help, raising concerns about the long-term sustainability of their retirement strategies."
He added the uptick in the number of people withdrawing cash from pensions was likely due to the cost of living crisis and ongoing economic pressures.
Greer commented: "The Labour government has stated that its pension review will aim to address these concerns by evaluating current policies and proposing measures to ensure retirees can sustain their income throughout retirement.
"This review is expected to prioritise clearer guidance and support, helping individuals make informed decisions and avoid detrimental financial mistakes."
He added it was likely to be aligned with the Advice Guidance Boundary Review currently taking place.
"This review seeks to ensure that consumers can access the help they need, whether through regulated advice or more general guidance, without facing unnecessary barriers or confusion," he explained. "The ultimate goal is to help more people access some form of assistance before they embark on their retirement strategies, ensuring they make the most of their pots and avoid hugely detrimental mistakes."
Value of withdrawals on the rise
Elsewhere, the data showed the amount of money being taken from pots was also on the increase.
The total withdrawals increased by 20.6%, climbing from £43,233m in 2022/23 to £52,152m in 2023/24.
Greer suggested that this increase reflected not only higher pension access but also that "people are raiding their pensions more to meet the higher costs in their lives".
