Around one in 10 people who are planning to retire this year expect to withdraw their entire pension savings in one lump sum, according to Prudential.
New research from the life insurance company's Class of 2018 study, has also found that a further one in five plan to take out more than the tax-free 25 per cent limit on withdrawals. Those accessing their cash are not spending it all.
However, 71 per cent of those questioned said that their reason for withdrawing an entire fund at once was to invest in other areas such as property, a saving accounts or an investment fund.
The most popular use of the cash apart from investing it, was for holidays, with 34 per cent planning to spend the money on trips. 25 per cent said that they would spend the money on home improvements while 20 per cent said that they would pass the money onto their children or grandchildren.
Another 20 per cent are aiming to buy a new car with the money and 18 per cent will use it to pay off the mortgage.
Prudential retirement income expert Stan Russell said that it was worrying that so many want to withdraw more than the tax-free lump sum limit: “The risk is even greater for those who are taking all their pension fund in cash," he warned.
"They not only face paying more in tax than they have to but also put their long-term retirement income security at risk."
Since the launch of pension freedom reforms in April 2015, more than 1.1 million people aged 55-plus have withdrawn around £15.7bn in flexible payments according to the government.
Government estimates show around £2.6bn was paid in tax by people taking advantage of pension freedoms in 2015/16 and 2016/17 tax years with another £1.1bn raised in the 2017/18 tax year.
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