The government and pensions industry have been urged to do more to improve take-up of guidance, after research from the Institute and Faculty of Actuaries (IFoA) revealed that 40 per cent of over-55s had not taken advice on accessing their pension savings.

The report revealed that less than a quarter (22 per cent) of respondents had used Pension Wise, despite only 26 per cent of respondents fully understanding the charges they are paying for their defined contribution pension, with 17 per cent having 'no idea at all'.

In addition to this, whilst 22 per cent of respondents expressed concerns over running out of money in retirement, more than half (51 per cent) believed that advice on accessing their pension was not necessary.

The report found that there was a significant difference by social background, with individuals from middle-class background being 15 percentage points more likely than those from working-class backgrounds to say that they did not need to access their pension.

There was also evidence of a gender imbalance, as 58 per cent of men who had accessed their pensions since the 2015 freedoms stated that they did not need advice or guidance, compared to 43 per cent of women.

Furthermore, where advice was required, men were 16 percentage points more likely to take tailored regulated financial advice, whereas women were 7 percentage points more likely to access generic guidance such as Pension Wise, and 6 percentage points more likely to ask friends or family.

Despite concerns, the survey found that 71 per cent of individuals who accessed their pension savings since the 2015 freedoms would not have done anything differently, although 9 per cent would have planned earlier to better understand their options.

In light of the findings, IFoA has outlined a number of recommendations, calling on the government to “reinvigorate” its public messaging round adequate pension saving levels, to ensure savers are not lulled into a false sense of security.

It also urged the government to consider the introduction of default decumulation pathways as an option for all, and as a safety net for savers who cannot engage with the decumulation process when entering retirement.

Whilst the IFoA also the proposals for the stronger nudge, it warned that other measures may be needed to support them, calling on the Financial Conduct Authority to set a specific and ambitious target to achieve a significant increase in take-up of Pension Wise appointments.

IFoA pension board chair, Leah Evans, commented: “While pension freedoms offer individuals much more choice and flexibility, our survey shows that many are still not confident about decisions around their pension pot as they approach retirement.

"Worryingly, there is also a lack of understanding around how their pension is being managed and invested.

“As we discussed in our 2021 Great Risk Transfer report, individuals, particularly those with defined contribution pensions, are left to manage the risk of ensuring they have enough savings to fund them through retirement without knowing how long they will live.

"It’s more important than ever that savers are prompted at every opportunity, by both government and industry, to take advice or guidance on their pension. This should help them get a better idea of whether they have enough saved to provide the lifestyle in retirement that they aspire to.”

“It is well known that, for a variety of reasons, there is a significant gap in the level of retirement income for men and women. Our research shows that there needs to be greater focus on finding specific ways to target and encourage those who need it most to seek appropriate advice or tailored guidance on their pension.”

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