Half of people using pension-freedoms rules to draw an income have not yet hit retirement

Insurer Zurich has found that more than 300,000 over-55s are taking a regular income from a pension in drawdown - even though they are still in full or part-time work.

Of those working full-time, more than half said they could get by easily without their pension cash, as did nearly a third of those in part-time jobs.

The findings, based on a YouGov survey of 2,000 people who have taken advantage of pension freedoms, raise fears that hundreds of thousands of savers could be burning through their pension cash too soon.

Alistair Wilson, Zurich's head of retail platform strategy, said: "Savers drawing a pension income they don't yet need are in danger of leaving a black hole in their finances when they eventually hit retirement.

"They could also be landed with a hefty tax bill if their pay packet and pension income push them into a higher tax bracket.

"It can be tempting to tap into your pension early, but if you can afford to leave the money invested, where it can keep growing tax-efficiently, you could build a bigger pot when you fully retire."

Since the pension reforms were introduced in 2015, savers have been able to unlock a 25% tax-free lump sum from their pension, and draw the remaining money flexibly, like a bank account.

Money held in a pension is shielded from income tax, capital gains and inheritance. But taking money out strips it of its protective tax wrapper, which is why it can be best to leave the money locked up until old age.

Zurich said savers who trigger an income from their pots, beyond taking the 25% tax-free cash, will also see the amount they can save into a pension slashed to £4,000 a year - reducing their chances of refilling their pot.

Mr Wilson added: "Savers should only consider dipping into their pension as a last resort. If people need to top-up their salary, or pay off a debt, it can be more tax-efficient to use money from ISAs or other investments first.

"Making a mistake with your pension can be disastrous - and could mean working on for longer, or facing financial hardship in retirement. Getting guidance or professional advice on your pension is the best way to avoid running out of money in old age."