A proposed £500 allowance to enable people to use their pension savings to pay for advice would be shunned by nearly two thirds of over 50s.

That was the indication from a research report into the recent government proposal, as respondents said they were unlikely to take up the offer.

Andrew Tully, pensions technical director at Retirement Advantage, which carried out the survey, said: ‘While it sounds like a good idea to let people use their pension savings to pay for advice, it appears not only are people unlikely to take up the offer, but £500 won’t actually go that far.”

The research also found that people who were not planning to use a financial adviser were put off by the cost of advice (38%) and the extent to which they can trust advisers (38%).

Mr Tully said: “Cost is clearly still a big issue when you ask people what the barriers are to seeking advice, alongside trust.

“On a positive note it is good to see government supporting advice and recognising the real value in people getting help and advice at retirement. The trick will now be to create a market which can service a wider range of consumers cost-effectively and also evidence the value of the advice being provided.”

The research, which was conducted by YouGov in March, surveying 1000 UK adults aged 50+ who have a DC pension and who are not in retirement, showed that the most common sources for financial advice among the over 50s were the internet (43%), financial advisers (43%) and the Government’s Pension Wise service (38%).

Mr Tully added: “The internet is clearly a force to be reckoned with as consumers self-direct or simply use it to check facts and figures.

“What we’ve found from speaking to consumers is that many are using a combination of web research and professional advice. Far from posing a challenge, we could be on the brink of creating a real opportunity for advisers who are digital-savvy.”