![\"Pensioner\"\/](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/12\/1765456755_654_pensioner.jpg\")
<\/p>\nA record number of Britons are turning to pension drawdown to manage their retirement savings, with new figures revealing a sharp rise in take-up.<\/p>\n
Financial Conduct Authority (FCA) data shows almost 350,000 people entered drawdown arrangements in 2024-25, representing a 26 per cent increase on last year.<\/p>\n
In 2019-20, just 197,000 plans were opened, meaning drawdown usage has risen by 78 per cent in five years.<\/p>\n
Drawdown allows savers aged 55 and over, rising to 57 from 2028, to access and invest their pension pot more flexibly than through traditional products.<\/p>\n
Under the rules, individuals can withdraw up to a quarter of their pension entirely tax-free at the outset.<\/p>\n
The remainder moves into a drawdown account and stays invested in assets such as stocks and bonds chosen by the saver.<\/p>\n
People can then take income or lump sums whenever they wish.<\/p>\n
Withdrawals beyond the 25 per cent tax-free portion are taxed at a person\u2019s standard income tax rate.<\/p>\n
Record numbers of Britons are opting for pension drawdown as take\u2011up surges<\/p>\n
| <\/p>\n
GETTY<\/p>\n
Products are offered by pension providers and investment platforms, giving consumers a wide range of options.<\/p>\n
The flexibility attracts many savers but introduces significant risk because funds remain invested, meaning their value can fluctuate and may fall sharply during market downturns.<\/p>\n
Taking too much too soon, or experiencing a period of weak investment performance, can exhaust a fund during retirement.<\/p>\n
Events such as global trade tensions or tariff disputes can also impact investment returns.<\/p>\n
![\"Worried](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/12\/worried-pensioners.jpg\")
Payments can be made monthly, quarterly, twice yearly or annually<\/p>\n
| GETTY\/GB NEWS<\/p>\n
Drawdown requires ongoing monitoring of investment performance and careful management of withdrawals.<\/p>\n
If a saver misjudges their decisions and the pot runs out, there is no safety net.<\/p>\n
Annuities operate very differently by providing a guaranteed income for life or a fixed term.<\/p>\n
People aged 55 and over can use their pension savings to buy an annuity from an insurance provider.<\/p>\n
Payments can be made monthly, quarterly, twice yearly or annually.<\/p>\n
Income levels depend on the pension pot size, the features selected and the purchaser\u2019s health.<\/p>\n
For example, a \u00a3100,000 pot placed into an annuity with a 5 per cent rate would deliver \u00a35,000 a year.<\/p>\n
The key distinction between drawdown and annuities lies in risk and flexibility.<\/p>\n
Drawdown offers control and the potential for investment growth but comes with no guarantees.<\/p>\n
Annuities provide certainty and stability but remove flexibility entirely.<\/p>\n
Many savers are now combining both options by splitting their pension pots to secure a guaranteed income while keeping some funds invested for future growth.<\/p>\n
![\"Skyrocketing](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/12\/1765456759_920_skyrocketing-state-pension-age.png\")
Annuities cannot be altered once purchased and do not allow lump-sum withdrawals.<\/p>\n
Lifetime annuities pay out until death, while fixed-term options run for set periods of between three and 25 years and are often used to bridge the gap until the state pension begins at 66.<\/p>\n
Several types exist, including level annuities, escalating annuities, inflation-linked products, enhanced versions for people with health issues and joint-life options that continue paying a partner after death.<\/p>\n
Annuity income is taxable and counts towards a person\u2019s annual tax-free allowance.<\/p>\n","protected":false},"excerpt":{"rendered":"A record number of Britons are turning to pension drawdown to manage their retirement savings, with new figures…\n","protected":false},"author":2,"featured_media":626256,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[51,474,1232,12,617,2499,285,619,512,16,3106,15],"class_list":{"0":"post-626255","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-money","11":"tag-news","12":"tag-pensions","13":"tag-personal-finance","14":"tag-politics","15":"tag-rachel-reeves","16":"tag-sgg","17":"tag-uk","18":"tag-uk-politics","19":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115700981004191685","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/626255","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=626255"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/626255\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/626256"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=626255"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=626255"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=626255"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}