More than a quarter of people approaching retirement are unaware of the tax charge they will face if they withdraw their pension savings as cash.

According to a survey of more than 2,000 over-55s by Legal & General, 27% believe they can access their pension pot tax-free, while 21% say they would be ‘shocked' at having to pay tax on it.

In fact, pension withdrawals are only tax-free for up to 25% of the amount withdrawn, with income tax due on the other 75%.

Savers were also reluctant to take risks with their pension pots. Nearly half (46%) don't want to take any risk at all, and 73% would avoid any ‘big risks'.

However, figures from the Financial Conduct Authority show that a third of people who recently invested in pension funds were not sure where their money had been invested.

Emma Byron, managing director at Legal & General, said:

"None of us spend as much time as we should thinking about pensions and retirement planning.

"But leaving important decisions about later life to the last minute could potentially leave you poorer in retirement.

"It might even put the hard-earned pension pot you've built up during your working life at risk."

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