Which? has called for a government-backed drawdown scheme.
A Which? study has shown consumers are being charged as much as 2.76 per cent to withdraw their money.
The government has already placed a cap of 0.75 per cent on fees levied on auto-enrolment pension schemes.
Richard Lloyd, executive director of Which?, said: “It’s right that the government is giving people the freedom to decide how and when they access their hard-earned pension savings, but deciding how to use these savings in retirement is one of the most complex financial decisions many will have to make, and one they cannot afford to get wrong.
“That’s why we want the government to take action to secure better pensions so people have just as much protection when they take money out of their pension as when they put money in.”
Mr Lloyd said the government drawdown scheme would be similar to Nest, and would provide a low-cost option.
He added that the government should extend the FSCS’ coverage of drawdown products to protect savings and cap fees.
Ray Black, managing director of Lincolnshire-based Money Minder Financial Services, said: “There will be some more cost-effective solutions for people wanting to draw down their pension pot – that’s just a matter of product development.”