Britons took more than £52 billion out of their pension pots in the latest tax year, up 21% from the year before, according to the latest data from the UK’s Financial Conduct Authority, as the cost-of-living crisis hit hard.

The total number of pension plans accessed for the first time from April 2023 to March 2024 jumped 20% to 885,455, according to the FCA, which monitors the data, and sales of annuities – boosted by rising interest rates – jumped 39% to more than 82,000.

“Inflation may have returned closer to ‘normal’ levels in recent months, but three years of spiking prices and rising interest rates has had a huge impact on Brits’ retirement plans, with both the number of people accessing their pension and the amount withdrawn surging in 2023/24,” said Tom Selby, director of public policy at online investment platform AJ Bell.

“This was an inevitable consequence of the cost-of-living crisis, with squeezed savers forced to turn to their pensions to make ends meet and help loved ones get through a temporary period of financial pain. As inflation calms, the volume and level of withdrawals via drawdown should also flatten out.”

Selby warned of the dangers of withdrawing too much too early from pensions.

“Anyone accessing their retirement pot for the first time needs to think carefully about the long-term sustainability of their withdrawals and the tax implications of accessing their pension. Taking too much, too soon from your hard-earned pension runs the risk of exhausting your fund early, while you may also end up paying unnecessary income tax if your withdrawal pushes you into a higher income tax band.”