Retirees are exposed to more than $635 million in extra tax each year due to laws that prevent superannuation funds from telling them to switch their savings into pension products when they exit the workforce, global financial services provider Mercer has warned.

The excess taxation equates to about $850 a head for nearly 750,000 retirees who are in superannuation products designed to accumulate wealth rather than draw it down, according to Mercer. It said the government must reform anti-hawking provisions and design and distribution laws for super to keep this cash in people’s pockets.