One in five - 21% - people who withdrew a cash lump sum from their pension pot did so as soon as they turned 55, many without taking advice or guidance from an expert.

One in four made pension withdrawals without seeking advice, exposing themselves to unexpected tax bills and losing entitlement to means-tested benefits.

While two-thirds took 25% or less of their pension to stay within the tax-free allowance, 10% withdraw their entire pot. Nearly a quarter don’t realise that taking a lump sum could affect their entitlement to means-tested benefits.

The concerning results of a new survey have been published today by Legal & General. The study showed that while some access a lump sum to cover immediate expenses, more simply take the money because they can.

A third - 32% - of people who accessed their pension did so to cover essential expenses, while a larger proportion (46%) said they take the lump sum “because they could.”

Over a quarter (27%) of UK adults aged 50 or over made decisions about their pensions without seeking advice or guidance.

The insurer has partnered with debt charity Turn2us to help customers understand their entitlement to state benefits and how they could be impacted by pension withdrawals. L&G said it will point customers to the Turn2us Benefits Calculator, a tool designed to help them check whether they are entitled to benefits and understand how changes to their circumstances may impact their benefit entitlement.

Katharine Photiou, managing director workplace savings at L&G, said: “Withdrawing without seeking advice or guidance can lead to unexpected consequences, like paying more tax or even losing access to benefits.

“By offering digital tools and resources, we hope to help people to make more informed decisions as they approach retirement."

Donisha Thompson, head of information programmes at Turn2us said: “Retirement should be an exciting chapter of life, but concerns about savings can make it stressful. The Turn2us Benefits Calculator can be used to check what support there is and how to claim it.”

• Research conducted on behalf of Legal & General by Opinium between 3-9 December 2024, among 3,000 UK over 50s