There was no collapse in pension savings in 2023 despite pressures on household finances, latest figures HMRC and DWP have shown.
The Department for Work and Pensions said overall participation in workplace pensions remained at 88 per cent for the second year running.
This meant there has been no significant drop in pension participation, said Emma Douglas, director of workplace savings and retirement at Aviva.
She said: "Pension saving appears to have passed one of its biggest tests since auto enrolment was introduced in 2012.
"Today’s official figures show no collapse in pension saving and no increase in ‘dash-for-cash’ withdrawals in 2023, despite pressures on household finances as inflation hit a four-decade high.
“Across all metrics, there has been no significant drop in pension participation since last year’s report. Different genders, ages and incomes have all shown remarkable resilience."
She added pension participation was at an all-time high with 22.3mn employees saving for their retirement and fewer than 1 per cent had made the active choice to stop saving in 2023, in line with previous years.
However, there is still work to be done on auto-enrolment, according to Pete Glancy, Scottish Widows' head of pensions.
He said: "Our latest 20th annual retirement report shows only a third (34 per cent) of people believe they are preparing adequately for retirement, and 38 per cent are not on track for even a minimum retirement lifestyle.
“This needs to change, and auto-enrolment is a big part of taking on this challenge.
"Now is the time for action. Improving pension savings by extending the scope of auto-enrolment while looking at how much people are saving for the future, and how that can be increased is crucial.”
Withdrawals in line with recent years
The government's data showed £12.8bn of individual contributions were made to personal pensions in 2022-2023, up from £12.7bn the previous year.
It also showed 2.6mn people have so far taken a flexible payment from a pension and 43 per cent of them were aged under 60 and a further 28 per cent aged 60-64.
Douglas said average withdrawals of around £15,000 in 2023 were in line with recent years, with the average single withdrawal coming in around £3,000.
She said this showed there was no evidence of a "systematic dash for cash".
However, Stephen Lowe, group communications director at Just, said the early withdrawals still raised questions about the sustainability of pensions in later life.
Of the £83bn taken in flexible payments since inception in 2015, 65 per cent has been taken by those aged under 65.
“Money taken from pensions early is obviously not going to be available when people are older,” he said.
“These figures show that early access to pensions is very common, usually long before state pension age.
"Most people need to manage their pension withdrawals very carefully to ensure they don’t run out and these figures do not inspire confidence that is happening."
He warned people should think carefully about the long-term consequences of accessing pension cash early.
