SMTP mail server with postfix/dovecot does not require authentication

Question

I have a mail server with postfix and dovecot with which I'm able to receive mail at my email address.

When I'm connecting from a remote mail client via POP3 it is saying authentication failed even though I am giving the right password.

But still the mail client is able to send mail from my account without proper authentication.

How would I configure it so that authentication is required to send email?

The output for postconf -n writes -

alias_database = hash:/etc/aliases
alias_maps = hash:/etc/aliases
append_dot_mydomain = no
biff = no
broken_sasl_auth_clients = yes
config_directory = /etc/postfix
home_mailbox = Maildir/
inet_interfaces = all
inet_protocols = all
mailbox_command =
mailbox_size_limit = 0
mydestination = example.com, mail.example.com, localhost.example.com, localhost
myhostname = mail.example.com
mynetworks = 127.0.0.0/8
myorigin = /etc/mailname
readme_directory = no
recipient_delimiter = +
relayhost =
smtp_tls_note_starttls_offer = yes
smtp_tls_security_level = may
smtp_tls_session_cache_database = btree:${data_directory}/smtp_scache
smtpd_banner = $myhostname ESMTP $mail_name (Ubuntu)
smtpd_recipient_restrictions =          permit_sasl_authenticated,permit_mynetworks,reject_unauth_destination
smtpd_sasl_auth_enable = yes
smtpd_sasl_local_domain =
smtpd_sasl_security_options = noanonymous
smtpd_sasl_type = cyrus
smtpd_sender_restrictions = reject_unknown_sender_domain,      reject_unknown_recipient_domain, reject_unauth_pipelining
smtpd_tls_CAfile = /etc/ssl/certs/cacert.pem
smtpd_tls_auth_only = no
smtpd_tls_cert_file = /etc/ssl/certs/smtpd.crt
smtpd_tls_key_file = /etc/ssl/private/smtpd.key
smtpd_tls_loglevel = 1
smtpd_tls_mandatory_ciphers = medium
smtpd_tls_mandatory_protocols = SSLv3, TLSv1
smtpd_tls_received_header = yes
smtpd_tls_session_cache_database = btree:${data_directory}/smtpd_scache
smtpd_tls_session_cache_timeout = 3600s
tls_random_source = dev:/dev/urandom

Thanks