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Pensions used to be a topic that people in Britain hated to talk about. And no wonder, when the statistics are so depressing. Most workers are not investing anywhere near enough to fund a comfortable retirement, yet saving any extra right now is a luxury few can afford.

A decade ago the industry started Pension Awareness Week, which has just taken place in an attempt to pull people’s heads out of the sand and get them thinking about pensions at a younger age. A laudable mission, but today’s over-55s are already rather too aware of their pension choices thanks to frenzied speculation about tax raids in the run-up to the autumn Budget.

The upshot? Those who have managed to save for retirement are taking it out again in droves. This risks making a bad situation worse for Generation X, the cohort aged 45 to 60, many of whom face a substantial pensions shortfall. Not only do they run the risk of a retirement with significantly lower financial security than their predecessors, but a new poll has evidenced a worrying lack of pensions knowhow.

Over £70bn was withdrawn from pension pots in the past tax year, according to figures released this week by the Financial Conduct Authority, an annual increase of 36 per cent. Part of this outsized jump could be put down to the prolonged cost of living crisis and Labour’s decision to apply inheritance tax to pensions from 2027 (though studies show most savers are unaware of the latter). But those lucky folks with large pensions are hoicking out their tax-free cash through fear of a further rule change.

Such withdrawals leapt 60 per cent to a record high of £18bn in the same period as older savers rushed to access their pots for the first time. The ability to take a quarter of your pension pot tax free (up to a cap of £268,275) is once again rumoured to be for the chop ahead of November’s Budget, and this week’s dire government borrowing numbers will do nothing to quell the speculation.

“Take your tax-free pension lump sum NOW if you plan to pay off the mortgage,” screamed a headline in the Daily Mail this week, to the disquiet of financial planners. An irreversible step, draining your pension fund in your fifties when it could remain invested and grow tax-free for decades is a bold call to make based on speculation. So is it any surprise that seven out of 10 people who decided to withdraw money from their pensions last year did so without taking financial advice?

While getting on in years, Gen X are bizarrely the generation that knows the least about pensions. The baby boomers benefited from gold-plated pensions that provided an income for life, but half of Gen X-ers say they have no idea how they will manage their pension in retirement, according to a poll carried out by the investment platform Interactive Investor. Half of Gen X didn’t know what level of pension savings they’d need to fund a comfortable retirement, and four in 10 had no idea what they were on track to have amassed by then.

While the boomers enjoyed a largely hands-off pension experience, today’s pension savers need to make active choices about how and where their pensions are invested, and how they might generate an income from them in later life. Yet a staggering 56 per cent of Gen X were unaware if their pension was being “lifestyled” — a gradual de-risking that automatically shifts more of your investments from equities into safer bonds as you age. Last year, I covered the case of a 59-year-old who saw nearly one-third wiped off the value of his pension pot due to high exposure to gilts — something he knew nothing about.

Many are also in the “sandwich generation”, caring for ageing parents and supporting adult children, says Maike Currie, head of personal finance at PensionBee, a pension consolidator. Their one saving grace? Property assets — both their own, and those they may inherit. Yet she notes these will be “pivotal” in supporting the generations above and below them.

As a 40-something, I’m hyper aware that my defined contribution pension pot could run out of money before I run out of life. I’m now paying in as much as I can afford, but I wish I’d started saving in my twenties instead of in my early thirties.

Younger generations may not have this problem. Auto enrolment has nudged millions of millennials and Gen Zs into starting pensions at a much earlier age, and social media is sparking fresh debate. Since launching on TikTok a year ago, Scottish Widows has notched up 300mn views. Short videos about pensions get through to people in a way a dry annual statement cannot.

These may inspire younger generations to invest and engage more, but as voters become more aware of the benefits, any big rule changes in the Budget risk destroying trust in the pensions system.

Claer Barrett is the FT’s consumer editor and author of the FT’s Sort Your Financial Life Out newsletter series; claer.barrett@ft.com; Instagram @ClaerB