Almost half of retirees that have started to take flexible withdrawals from their pension are worried about running out of money, according to research.
Drawdown - where a person's pension usually remains invested as they withdraw from it to fund their lifestyle once they have left work - used to be the preserve of mainly wealth pensioners.
But since the introduction of pension freedoms in 2015, millions more pensions have opted for this way of funding their retirement, instead of buying a fixed income with an annuity.
The survey by AJ Bell, which polled 250 British adults over 55 years old, found the growing demand for the pension freedoms has been driven primarily by people wanting control over their retirement savings, with half of the respondents giving this as a reason for not purchasing an annuity.
According to figures published today by the HM Revenue and Customs (HMRC), drawdown sales have reached their highest level since pension freedoms were introduced in 2015.
The poor value perceived in annuities is also a major contributing factor for 30 per cent of the individuals.
And even though the majority of savers (78 per cent) feels that they are in control of their retirement income, many people do not understand some fundamental elements of their pension savings.
According to the research, over half of those questioned don’t know how their pension fund is invested and a quarter never review the amount they are withdrawing.
For Tom Selby, senior analyst at AJ Bell, savers have taken on the investment and longevity risk that previously would have sat with annuity providers in return of having control of their pensions.
He said: “This trend has significant long term implications which we are yet to see play out.
“The bottom line is that almost half the people using the pension freedoms are worried about running out of money.
Savers will struggle to achieve peace of mind unless they engage in the process, understand the various risks and build a sustainable retirement income plan.”
According to Mr Selby, “many appear not to be doing so at the moment and this engagement gap could have serious repercussions further down the line.”
He argued that it vital that “government, regulators and the industry continue to monitor the progress of the pension freedoms and communicate with savers to give them a better understanding of retirement issues”.
He said: “Failure to engender genuine engagement and improve the availability and take-up of regulated advice and guidance risks leaving a generation of savers fumbling through the pensions wilderness.”
The Work and Pensions Select Committee is currently investigating whether the pension freedom reforms are working, after launching an inquiry last month.