About a tenth of the UK’s adult population is open to cashing in their whole pension pot when they retire, as widespread confusion about retirement options persists.
Research from wealth manager Tilney found widespread uncertainty around the retirement people were looking for, with just 22 per cent saying they planned to stay invested, and half of that (10 per cent) planning to retire on an annuity.
But 40 per cent said they had no idea what they would do with their pension when they retired, while 10 per cent would potentially use their pension freedoms to cash in the lot.
Tilney surveyed 1,293 nationally representative UK adults with at least one workplace pension in April 2018.
Andy James, head of retirement planning at the firm, pointed to potentially heavy tax charges for those drawing more than the tax free 25 per cent lump sum.
He also warned of the dangers in people shunning annuities for drawdown, which offers no guaranteed income for life.
He said: "Since former Chancellor George Osborne stood up in Parliament in his March 2014 Budget and launched his groundbreaking overhaul of pensions by saying no-one would have to buy an annuity in the future, we have seen 75 per cent fewer people choosing to buy one when they retire.
"I am concerned that the pendulum may have swung too far and some of those opting for drawdown without having put a careful plan in place to match their resources against estimated future costs and liabilities, could find they end up draining their pension assets way too rapidly and end up running out of financial resources part way through retirement."
Like other surveys before it, Tilney found interest in annuities was low but the idea of having a guaranteed income for life was desirable.
It found when the word "annuity" was removed, 79 per cent of respondents said a pension that provides them with a "guaranteed income for life" was more appealing than one where the value and income levels will vary year to year, even if it held out the potential prospect of better returns.
Tilney said this suggested the annuity brand was "seriously tarnished" but demand for the product had not actually gone away.
At the same time, Tilney said too many people were walking into drawdown without sufficient planning and risked running out of cash early.
About one in five (21 per cent) people appeared to have no idea how much annual income they would need in retirement in order to fund the lifestyle they required, Tilney said.
It found 38 per cent were hoping to achieve between £10,000 and £20,000, while 22 per cent were aiming slightly higher at £20,000 to £30,000, and a quarter of the highest earners (£50,000 or more) believed they would need £30,000 to £40,000 each year.
More than half (51 per cent) admitted they had no idea what size pension pot they would need to provide this income at retirement.
Nevertheless 48 per cent said they felt confident they could achieve the income they wanted with men typically being more optimistic than women.