Although 27 per cent of over-55s plan to use the new pension freedoms to make a cash withdrawal, money.co.uk research reveals half will not pay for financial advice – and only 20 per cent would be willing to pay at all.

A fifth of those intending to make withdrawals intend to take advantage of the free 30 minute consultation offered via the government’s Pension Wise initiative.

Statistics published by Pension Wise in July indicate that of the 85,000 who have taken advantage of the freedoms since 6 April, a quarter have used the service.

With many providers making withdrawals contingent on retirees seeking advice, this reticence could create problems for those wishing to access their pensions.

Reasons for people not seeking advice include: not thinking they need it (59 per cent), believing it is a waste of money (28 per cent), feeling they cannot afford it (27 per cent) and wanting faster access to their money (15 per cent).

Those planning to make a withdrawal from their pension would on average be willing to pay a maximum £253 for financial advice.

Hargreaves Lansdown calculated the average cost of an initial financial review to be £500. However, the study highlights the pressing need for retirees to seek advice. A mere 38 per cent of those intending to make a withdrawal fully understand the tax implications of doing so.

Hannah Maundrell of money.co.uk said: “Before you make any decision on your retirement savings, Pension Wise should definitely be your first port of call. It’s free and only takes 30 minutes, so what have you go to lose?”

“Keep in mind this service will only talk you through your options; while it will help, it won’t give you expert insight. Given you stand to lose a fair whack of your retirement savings to the taxman if you get things wrong, getting help from a decent financial advisor is likely to be worthwhile – even if you have to shell out for it.

“Our concern is that people will rush into a decision without fully researching the long term impact or costings, simply because they need cash fast. Looking before you leap is the name of the game, especially when you’re gambling a financial future that you’ve worked so hard to save for.”

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