Skandia is reminding pensioners in drawdown to use their full income allowance to maximise tax efficiency.
The firm found only one third of consumers in drawdown were using their full allowance.
The remaining 65 per cent of people had the opportunity to increase their tax efficiency by using some of their pension income to build new pension savings.
Individuals under 75 can achieve tax relief on contributions into a pension of up to £3,600 each year even if they are not working. Those who are working qualify for tax relief on further contributions, subject to the annual contribution allowance and level of earnings.
The income tax paid when money is taken from the existing pensions is offset by the tax relief received when invested as new pension savings.
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Skandia said the benefits of using unused drawdown were that the new pension fund is not deemed to be 'in drawdown' and is therefore not subject to the 55 per cent tax liability on lump sums which is paid to beneficiaries on death before age 75.
Secondly, the new pension fund would provide a further 25 per cent tax free lump sum as part of their future allowance, provided the savings are within the Lifetime Allowance.
Adrian Walker, Skandia's pension expert, said: "There is a great opportunity for those in drawdown who have taken their tax free lump, but are not using all of their available income to improve the tax efficiency of those savings with no real cost to themselves.
"Not only does this planning reduce the potential tax liability for their beneficiaries on any available lump sum if they die before 75, it will also build another 25 per cent tax free lump sum, helping provide greater income in the longer-term."