People tempted to take their pension before they retire are being warned of the dangers.

They could end up with much less money than if they'd waited, says the Financial Services Authority (FSA).

It has launched a campaign to alert people to the potential pitfalls of what's called pension unlocking.

This is where someone over the age of 50 can release their pension benefits from an occupational scheme before they have reached retirement age.

Annual income

The benefits are transferred to a new pension arrangement from which they can get their money.

It's possible to take a tax-free lump sum and use the rest to buy an annuity - this gives you an annual income for the rest of your life.

David Kenmir: "Stop and think"

But you could find the income you get during retirement is substantially reduced.

"This may sound very tempting but you need to stop and think about whether you really need to do it," says David Kenmir, director of investment firms at the FSA.

"It's an expensive way to free up extra cash and, in addition, your financial adviser may well take a fee for dealing with it meaning that part of your hard-earned pension pot will benefit him rather than you."

The FSA gives the example of a 53-year-old man unlocking a final salary pension with a former employer.

The pension fund has a transfer value of �11,256.

If he waits to retire at 65:

He would get a �4,783 lump sum

His annuity would be �1,824

If he retires at 53:

�4,606 lump sum

�516 annuity, rising to �693 at 65

If he unlocks his pension:

�4,337 lump sum

�91 annuity, rising to �340 at 65

The FSA says consumers should ask themselves a number of questions before deciding whether or not to unlock their pension.

How much cash do I actually need now?

Would I be better off borrowing the money?

Should I consider selling or cashing in other investments?

If I cash in my pension now, will I have enough to live on in retirement?

Malcolm Mclean: "Be careful"

"It will affect your income and retirement for the rest of your life - there are likely to be better ways to address any short term cash needs so think very carefully about it," says David Kenmir.

Malcolm McLean, chief executive of the Pensions Advisory Service, agrees that other options should be considered.

"Carrots are dangled in the form of adverts in newspapers and on television and clearly it sounds attractive, but people do need to be careful," he says.

The FSA is keeping an eye on firms involved in unlocking pensions to make sure customers are not given inappropriate advice.