The number of pension plans accessed for the first time rose by 19.7 per cent in 2023-24 compared with the previous year but less people are accessing advice when doing so, FCA data has found.
The Financial Conduct Authority's latest retirement income data shows first time withdrawals reached 885,455, compared with 739,652 in 2022-23.
Of these, just 30 per cent had sought regulated advice, a drop from 32 per cent the previous year.
The overall value of money being withdrawn from pension pots increased to £52mn in 2023/24 from £43mn in 2022/23 - an increase of 20.6 per cent.
Sales of annuities also rose by 38.7 per cent from 59,163 to 82,061 in 2023-24.
Jon Greer, head of retirement policy at Quilter said the drop in the number of people seeking advice raises concerns about the long-term sustainability of their retirement strategies.
He said: "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.
"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."
Greer added a rise in annuity sales reflects the fact people are "raiding their pensions more to meet the higher costs in their lives".
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown added: "It's great that people are getting good value from the annuity market, but the data also shows that people may not necessarily be opting for the best product for their needs.
"Annuity purchases were overwhelmingly taken on single life and level basis. This potentially means there are spouses that could be left with nothing when their partner dies. In addition, a sudden surge in inflation like we have seen in recent years could whittle away the purchasing power of that level annuity that looked such good value just a short time ago.
"It’s vital that you consider what you need from your retirement income and look across the market before deciding to purchase an annuity rather than taking the first or highest income offered. Annuity comparison tools can allow you to do this easily and effectively."
The data also showed there had been a drop in defined benefit to defined contribution transfers which fell from 18,080 in 2022-23 to 7,181 in the latest year.
tara.o'connor@ft.com
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