Ten years on: Pension freedoms deliver flexibility – but at a cost, finds new AKG research

11 June 2025

- 71% of consumers (with an awareness of the freedoms changes) value the ability to access pensions flexibly, but 45% worry having more flexibility means they may run out of money in retirement.
- 43% of advisers say increased pension flexibility is confusing clients; 41% believe it increases risk of exhausting funds.

11 June 2025: The flexibility brought about by pension freedoms continues to reshape retirement income planning – but it also brings increasing challenges for both advised and non-advised consumers, according to a new industry research paper from financial strength ratings specialist AKG, part of Defaqto.

Research for the paper ‘Ten Years of Freedoms – Lessons, Gaps, and the Road Ahead’ finds widespread support for flexibility in retirement planning, but also highlights growing concerns around unsustainable withdrawals and persistently low levels of public understanding.

The industry analysis, underpinned by fresh market research, reveals mixed consumer understanding and appreciation of pension freedoms:

Fewer than half of consumers (47%) are aware of the reforms – with 27% saying they understand how the changes affect them, and 19% saying they do not (percentages rounded)
71% of those aware of the reforms say they value the flexibility to access their pension savings as they wish
59% are actively trying to balance investment risk with their income needs in retirement

However, this is combined with an equally clear sense of unease:

45% worry they may run out of money due to increased choice
44% say retirement planning has become more confusing since freedoms were introduced

Advisers echo these concerns, with 41% saying that flexibility has increased the risk of clients depleting their pension funds, and 43% believing clients are confused by the broader range of retirement options. Despite this, half (51%) still view the introduction of greater flexibility as a positive development for their clients over the past decade.

The AKG paper, sponsored by Fidelity and Standard Life, also highlights a sharp divide between advised and unadvised consumers. While those receiving financial advice benefit from structured retirement planning – such as cashflow modelling and 'bucketing' strategies – those without advice are being left to navigate complex options with limited understanding of the associated risks and consequences.

The report reveals a growing advice gap: only 29% of consumers say they would turn to a financial adviser for support, and just 20% are willing to pay for financial advice.

Matt Ward, Communications Director at AKG, said:

“Whilst flexibility has empowered more personalised retirement journeys, it is also increasing the risks of poor financial outcomes. Consumers are making life defining decisions without full understanding. The right combination of guidance, accessible advice and innovation will make freedoms work better in the next decade.”

Warren Bright, Head of Retail Intermediary Distribution at Standard Life, said:

“With freedom has come great responsibility – people need access to the right support to take a clear view of their options, make the right decisions and ensure their money lasts. The role of advisers has never been more important for society with full financial advice remaining the gold standard. However, if we want to continue revolutionising people’s retirement prospects across the next decade, we need collaboration between government, regulators, providers and advisers to take positive steps towards helping more people when it comes to making major financial decisions around retirement. We know that many are unwilling or unable to seek advice and addressing adequacy and access are key. The ongoing consultation on Targeted Support, if implemented properly, has the potential to address the balance where worryingly 90% of people are making retirement decisions unsupported.”

Advisers interviewed in the research also repeatedly highlighted the need for more decumulation focused product innovation and better support from platforms in managing clients’ retirement income strategies. Many (40%) believe that platform operators are well positioned to flourish over the next few years but only if they continue to evolve their offerings.

Paul Richards, Head of Adviser Distribution at Fidelity Adviser Solutions, said:

“Platforms, with their comprehensive package of solutions and wrappers, are exceptionally well-placed to support advisers and their clients through the whole retirement planning journey – both pre- and post-retirement. Not only do they provide clients with choice and value for money, advice firms stand to benefit as well through increased efficiencies and complementary platform services.”

With the release of the paper, AKG intends for this tenth anniversary publication to be a practical contribution to ongoing industry debate. It aims to provide a platform for discussion around product development, regulation, guidance innovation and education in the pensions and retirement advice industry.

The paper ‘Ten Years of Freedoms – Lessons, Gaps, and the Road Ahead’ can be downloaded in full from: https://www.akg.co.uk/downloads