Financial illiteracy blamed for growing govt tax take

He said: "Some would rather pay the hefty tax upfront and 'get their money out', rather than consider to keep the pension as part of their retirement income to provide tax-efficient income by spreading withdrawals over a number of years.

"The government is largely to blame for this for relentlessly tinkering with pensions every year and you hear the phrase 'I don’t trust pensions' all too frequently and for the wrong reasons."

Regarding drawdown strategies, Mr Chan said these "should always be tailored to the client and market conditions rather than sticking with, say, the 4 per cent rule of thumb as it does not consider longevity risk or protect against sequence of return risk".