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New paper commissioned by Age UK warns that the Pensions Freedoms are letting down many ordinary older people and proposes solutions

By: Age UK
Published on 30 June 2019 12:00 AM


A new paper published today shows that the low take up of advice and guidance provision is failing to meet either the expectations or needs of consumers, and that as a result many ordinary older people are making risky decisions they may subsequently come to regret.

'Fixing the Freedoms' – written by Dominic Lindley, an independent consumer consultant – was commissioned by Age UK to investigate the development of retirement income products, customer support, and industry thinking since the pension freedoms came into effect in 2015. The paper is the result of a series of interviews with specialists from across the pensions industry.

A lack of innovation since the introduction of the pension freedoms four years ago is forcing many older savers into making complex pensions decisions without advice or support, or without appropriate products to choose from, according to the paper.

Age UK is warning that the potential for – and consequences of – customers getting it wrong are huge. Many older people are unaware of the need to factor in elements such as upcoming tax bills and state benefit rules, and the Charity is concerned that getting to grips with the new flexibilities is an extremely challenging prospect for the majority of savers who have never previously thought much about their pension.

The Charity is also worried that limited innovation aimed at consumers with small to medium-sized pension pots in particular has left many lacking access to good-value and appropriate products, and without the tools to help them manage their money effectively. This despite one of the main aims of the pension freedoms being to allow pension providers much greater freedom to innovate and create products and processes which better met the evolving needs of consumers. Empowering consumers to make their own choices was, at the time, predicted to stimulate innovation and competition in the market. However, this appears to be taking a lot longer, and to be happening to a more limited degree, than the champions of the pension flexibilities had hoped.

In addition, many of the experts who were interviewed for this project expressed concern that some sort of scandal related to pension freedoms may well emerge over the next few years – most likely as a result of a market downturn or a sustained period of poor returns, causing many older people who have not understood the risks of their drawdown fund or who are holding inappropriate investments because of inadequate advice to suffer losses. Figures from the Financial Conduct Authority (FCA) show that over 90,000 consumers run the risk of running out of money in a market downturn unless they cut the amount they are taking out.

The Charity is calling for urgent and decisive action from the sector to implement the following key recommendations, aimed at ensuring ordinary older people with modest amounts of pension wealth to draw on get a better deal from the pension freedoms:

1. Consumers cashing in their pension
- Clearer warnings on tax payments and a chance to think again on withdrawals
- Better rates on cash deposits

2. More suitable products
- Enable NEST to offer retirement income products
- Charge cap for income drawdown pensions
- Better investment pathways and stronger governance
- Help consumers in drawdown use their savings wisely
- A better annuity market

3. Helping consumers get the most from freedom and choice
- Comprehensive Pensions Dashboards
- Default guidance with an independent opt-out process
- Clearer warnings about impact on state entitlements
- Provide extra help and support to vulnerable customers
- Protect pension guarantees
- Stronger action to end inappropriate Defined Benefit transfers

Caroline Abrahams, Charity Director at Age UK, said: "The Pension Freedoms introduced in 2015 have been really popular to date and there's no doubt that many are enjoying and benefitting from the greater flexibility they've been given. However, we are worried that a lot of older people with small and medium-sized pension pots, who do not pretend to be particularly financially savvy, are making risky decisions that could leave them in a mess in a few years' time, especially if there's a downturn in the market as is bound to happen at some point.

"Without decisive action the level of detriment will only increase as more consumers reach retirement. Engaging and empowering consumers by providing them with information and encouraging them to take up guidance is important, but not enough on its own. As a minimum, we need to get more people to use the Pension Wise service, which has proven popular but with far too few savers using it. The Government and the FCA need to take a far more proactive approach to ensuring that these consumers get a good deal so that if and when a market storm hits, it does not destroy public trust in pensions and the reasonable aspirations of thousands of consumers for a comfortable retirement.

"The onus is on the Government to make it easier for people with modest amounts of pension wealth to take smart decisions that really will benefit them into the longer term, not just today, through increased use of default options."

Any older person who is concerned about their retirement income can call Age UK Advice free of charge on 0800 169 6565, visit or contact their local Age UK for further information and advice.

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Last updated: Feb 05 2024

Download our discussion paper

Fixing the freedoms: Helping smaller savers get the most out of the pension reforms

Notes to editors:

Age UK is a national charity that works with a network of partners, including Age Scotland, Age Cymru, Age NI and local Age UKs across England, to help everyone make the most of later life, whatever their circumstances.

In the UK, the Charity helps more than seven million older people each year by providing advice and support.  It also researches and campaigns on the issues that matter most to older people. Its work focuses on ensuring that older people: have enough money; enjoy life and feel well; receive high quality health and care; are comfortable, safe and secure at home; and feel valued and able to participate.

Age UK’s subsidiary charity, Age International, supports older people globally in over 30 developing countries by funding programmes such as vital emergency relief and healthcare and campaigning to raise awareness and change policies.

Age UK is a charitable company limited by guarantee and registered in England (registered charity number 1128267 and registered company number 6825798). Charitable services are provided through Age UK and commercial products are offered by the Charity’s Community Interest Company (CiC) (registered company number 1102972) which donates its net profits to Age UK (the Charity)


Age UK

We work with our national partners, Age Scotland, Age Cymru and Age NI and our local Age UK partners in England (together the Age UK Family). We also work internationally for people in later life as a member of the DEC and with our sister charity Help Age International.

Age UK believes that everyone should have the opportunity to make the most of later life, whatever their circumstances. We provide free information, advice and support to over six million people; commercial products and services to over one million customers; and research and campaign on the issues that matter to people in later life. Our work focuses on five key areas: money matters, health and well-being, home and care, work and training and leisure and lifestyle.

Age UK is a charitable company limited by guarantee and registered in England (registered charity number 1128267 and company number 6825798). Age Concern England and Help the Aged (both registered charities), and their trading and other associated companies merged on the 1st April 2009. Together they have formed the Age UK Group ("we"). Charitable services are offered through Age UK and commercial products are offered by the Charity's trading companies, which donate their net profits to Age UK (the Charity).

For more information

Contact the Age UK Media team on 020 3033 1430 during office hours (Mon-Fri 08:30-17:30) or for out-of-hours media support please email 

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