Consumer research for platform and SIPP provider AJ Bell suggests that the growing demand for the pension freedoms has been driven mainly by people wanting control over their retirement savings, with half those questioned (52%) giving this as a reason for not purchasing an annuity.

Just over three quarters (78%) of people said they felt in control of their retirement income. However, the risks that come with remaining invested in retirement are “weighing on many people’s minds,” says AJ Bell with almost half (46%) of respondents saying they now worry about running out of money.

The latest HMRC data shows that 198,000 people made pension freedom withdrawals totalling £1.59 billion in Q3 2017, an increase from 158,000 people withdrawing £1.54 billion in the same period last year, but almost half are worked about running out of money in retirement.

This concern is not helped by the fact that many people do not understand some “fundamental elements” of their pension savings.  For example, over half (53%) of those questioned don’t know how their pension fund is invested and a quarter (26%) never review the amount they are withdrawing.

Tom Selby, senior analyst at AJ Bell, said: “UK pension savers clearly want more control over their retirement savings and the pension freedoms have been remarkably successful at delivering this.  However, in return for this control they have taken on the investment and longevity risk that previously would have sat with annuity providers.

“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. Many appear not to be doing so at the moment and this engagement gap could have serious repercussions further down the line.

“It is vital the 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. 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.”

ComRes interviewed 250 British adults on behalf of AJ Bell in June aged 55+ who have entered pension drawdown since 6 April 2015 and have not purchased an annuity.