There's an urgent need for better at-retirement support, according to former pensions minister Steve Webb, who has called on the FCA to speed up its advice/guidance review.

He made the call after new figures issued by the regulator showed that more than half of all pension pots are still cashed out in full.

The data for 2023/24 on the retirement income market published by the FCA on Thursday, showed how consumer behaviour at retirement is changing in terms of choice between annuity, drawdown and full encashment.

The data also covered the use of financial advice, and the latest numbers on DB to DC transfers.

The figures revealed a 20% rise in the number of pension plans accessed for the first time between April 2023 and March this year.

Although annuities remained far less popular than drawdown or cashing out in full, annuities sales rose sharply, from 59,163 to 82,061 – up 39%.

Take up of drawdown also increased, by 28%, from 218,183 to 278,977.

Full encashment remained the most popular option, especially for smaller pension pots, with around 470,000 pots taken out in full in 2023/24, up from around 420,000 in the previous year. 

However, a slightly smaller percentage of pots were cashed out in full compared with previous years – around 53% in the latest year compared with around 57% in 2022/23.

The use of financial advice fell slightly, from 32.9% in 22/23 to 30.9% in 23/24, which means that more than two in three at-retirement decisions are taken without advice, warned Mr Webb, a partner at actuarial consultants LCP.

He said: “The figures show that we still have a very long way to go on the DC savings journey. Most savers build up relatively small pots and cash them out in full, and we urgently need to get to the stage where pots are large enough to take gradually over retirement.

“The drop in use of financial advice increases the need for the FCA to complete its review of the boundary between financial advice and ‘guidance’. 

“Hundreds of thousands of people take their pensions each year with no advice, and much more needs to be done to help them make well-informed decisions.”