The FCA pension withdrawal surge recorded in 2025/26 has laid bare just how profoundly tax uncertainty is reshaping retirement behaviour, with £91.2 billion withdrawn from pension pots accessed for the first time in the year, according to new Financial Conduct Authority figures. That represents a 22% rise from £75 billion the previous year and is 70% higher than the £53.6 billion recorded in 2023/24.
What the FCA pension withdrawal surge tells portfolio managers
The pace of withdrawals has comfortably outrun the growth in the number of pots being accessed. The number of pensions accessed for the first time rose 7% year-on-year to just over 1.04 million, meaning the average pot being drawn down has grown materially in cash terms. For anyone advising clients or managing their own drawdown strategy, that gap between volume and value is worth understanding: more people are taking more money, not just more people taking anything at all.
Pete Cowell, Head of Annuities at Standard Life, framed the stakes plainly: ‘With over a million pension plans being accessed for the first time, more people than ever are facing one of the biggest financial decisions of their lives: how to turn their pension savings into a retirement income.’
The inheritance tax changes on the horizon for pension assets appear to be a meaningful driver. Savers who had previously treated their SIPP as an IHT-efficient estate-planning vehicle are reassessing. The risk here, from a portfolio-construction standpoint, is sequence-of-returns risk: those accelerating withdrawals now may be crystallising assets at valuations and tax positions that will not serve them well over a ten-to-twenty-year retirement horizon.
Regulatory pressure clears CFD market as pension decisions multiply
Separately, the FCA has moved decisively against higher-risk retail products. Twenty-one contracts for difference brokers have shuttered their operations since 2025 under regulatory pressure, with a further three currently in the process of cancelling their permissions. The regulator found widespread abuse of UK regulatory permissions used to mask high-risk offshore activity. For savers who may have encountered CFD platforms in their search for yield, the message is unambiguous: the FCA is prepared to remove permissions entirely rather than simply issue warnings.
For those in or approaching drawdown, the two stories sit side by side for a reason. Pension freedoms created genuine flexibility; they also created genuine complexity. Withdrawing large sums under tax or policy anxiety, without a clear income plan, is precisely the environment in which poor sequencing decisions take root.
Meanwhile, AJ Bell analysis shows the average age at which women leave the labour market reached a record high of 65.1 in 2026, up from 64.7 in 2025. Later working lives extend the accumulation phase but also compress the window for pre-retirement planning. Those still in employment past 65 should revisit contribution levels and drawdown sequencing before the next fiscal event, rather than waiting for a policy change to force their hand.
