Cash point

One in three of the 500,000 people who have put their pension savings into an income drawdown plan have no investment experience.

Insurance giant Zurich is warning huge numbers risk running out of money too early as two in five choosing drawdown products did not get any financial advice or guidance.

Since the pension freedoms were introduced in 2015, drawdown sales, offering a flexible way to take cash as and when, are now twice that of annuities. An annuity guarantees an income for life.

A lack of understanding about drawdown being an investment – where funds can go down as well as up – means poor decisions can lead to people taking too much risk, missing out on investment growth or taking unsustainable high withdrawals that don’t match the performance of the drawdown plan’s fund.

Alistair Wilson, pensions expert at Zurich, said: “For retirees not getting advice, there is a danger they could end up picking the wrong investments or taking money out too quickly.”