Pension freedoms: 10 years later

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Pension freedoms transformed the employment landscape – but with greater choice comes greater complexity

TEN YEARS ago, the pension landscape in the UK changed dramatically almost overnight. As of April 2015, the introduction of pension freedoms meant that, finally, customers were empowered to take control of their own savings – a move that brought both autonomy and flexibility. The pension freedoms legislation allows people to access their pension pots from the age of 55 – moving away from the more traditional ‘defined benefit’ model and towards a more individualized, tailored approach. However, with greater choice comes greater complexity – individuals are still uncertain which options to take to reach their retirement goals. Ten years on, Nick Flynn, sales and distribution director of retirement at Canada Life UK, explains that while pension freedoms were undoubtedly a great leap forward for the pension planning landscape, the way they were introduced caused some confusion for a while. “The government decided that the choices of buying an annuity for the vast majority of people were too limited – so they completely stripped the requirement,” Flynn tells

At Canada Life, we aim to build stronger, more financially secure futures through our retirement, investment, and protection solutions. Present in the UK since 1903, we believe in being here to support your clients through their retirement. We understand that financial security gives our customers the financial freedom and well-being that comes with it. And when it comes to retirement, we want our customers to have the tools to make the most of their financial future. Our retirement products have been built with simplicity and security in mind, so that our customers can focus on enjoying their later life.

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Customers conflicted over financial wellness

Only 17% of those aged 55−64 know where to go for financial advice

“You’d be very surprised if you spoke to someone about their mortgage and they didn’t know when it matured or who it was with … so why, when it comes to a pension, do people not know where it’s invested?”

Nick Flynn, Canada Life UK

Mortgage Introducer. “They dropped the shackles and restrictions; however, they did it immediately and without any proper consultations.” The result? Well, it came as quite a surprise to not only the benefits sector but also insurance firms, investment fund managers, and HR teams – with everyone scrambling to adapt to the new world order quickly. And although news like this is often leaked, the fact that the industry was kept in the dark only added to the uncertainty. “Ultimately, pension freedoms was a brilliant thing,” says Flynn. “It was just badly handled and rushed. It would have been much better to have a more planned approach. Once it was announced, everyone rushed around to reorganize their products and solutions. Annuities weren’t offering great value at that point – the options within them were limited, the rates were poor. It just wasn’t a great set of choices or outcomes.”

Now, however, these flexibilities have massively improved. Rates are good and the landscape is in much better shape, meaning buying an annuity is becoming quite popular. But while it’s a step in the right direction, this greater variety of options means customers have more challenging choices to make. This, Flynn notes, makes seeking professional advice invaluable. “Whether you’re going into a drawdown plan or you’re going into an annuity, you need advice,” he says. “Likewise, I think there’s a duty for people to take some [responsibility] for themselves as well. We all have various different financial commitments in our life, whether it be your car loan or your

mortgage. You’d be very surprised if you spoke to someone about their mortgage and they didn’t know when it matured or who it was with, or what rate it was on, or approximately how much they owed. So why, when it comes to a pension, do people not know where it’s invested?”

This lack of awareness when it comes to pensions means that people simply aren’t making the most of their savings or plans – something which is especially concerning given that we’re all living much longer. Canada Life’s Life100+ research found that over the next 25 years, the UK can expect to see a 200% increase in the number of centenarians. Considering this, 69% of those asked believe that retiring in your sixties will become a thing of the past, while 48% argue that that living longer means they’ll need to work for longer. Flynn, however, doesn’t necessarily agree. “People have got to be realistic,” he says. “Living longer doesn’t necessarily mean you’re going to work longer and be healthy as well. You may well be unable to work for a certain period. As such, you’ve got to look for a combination of flexibility and certainty as well − don’t just go all in.” Instead, Flynn advises individuals to get a feel for the market first – try selecting options that aren’t completely tight or limited and instead go for a solution they’ve researched and understood themselves. After all, a lack of knowledge in this space is only causing more headaches for confused customers down the line – especially when it comes to understanding the size of the savings.

Looking to what the future holds for pension freedoms and the landscape at large, Flynn says the next few years will be defined by market volatility and an increase in interest from the younger generation around where and how they grow their savings. “Most people under 50 have got a defined contribution pension plan that’s growing at a rate of 10% a year,” he notes. “The combination of contributions and market growth is also getting bigger, meaning these pots will be at an average size

of £80,000 or £90,000 next year. And they’ll just keep growing.” As for the short term, Flynn says that market fluctuations are going to take precedence there too: customers can expect to see their funds going up 10% or down 10% until everything settles. Overall, he sees people taking a bigger interest in finances since things have become more complex – adding that 2025 will be dominated by market volatility. “I can’t see it all going back to normal next month or so. Beyond that, I think we’ll see new providers coming into the market – other players are coming back for the first time in many years. Because once pension freedoms happened, a lot of providers gave up. We went from having 12 to five within a couple of years. Now we’re gradually going back up again – not only is the market there, but the funds are there as well.”

Stack of coins and a miniature people with a orange umbrella.

The importance of advice in managing options

Does living longer mean working longer?

Published June 2, 2025

“People have got to be realistic − living longer doesn’t necessarily mean you’re going to work longer and be healthy as well”

Nick Flynn, Canada Life UK

Of those not retired, 41% are unsure about how much they will need for an additional £20,000 retirement income, combined with their state pension and consequently longer lives

33% wrongly believe they will need less than £200,000

Source: Canada Life’s Life100+

under 35 have less than £10,000 in savings or no savings

Savings linked to overall life satisfaction

Source: Canada Life’s Life100+

45%

aged 35−54 have less than £10,000 in savings or no savings

43%

aged 55−64 have less than £10,000 in savings or no savings

32%

aged 65−74 have less than £10,000 in savings

19%

“The average pot size has got a lot larger,” says Flynn. “There was an awful lot of small pot sizes as defined contribution and employer-based schemes became the norm – it was quite common to see £15,000, £20,000, £30,000 funds. However, as those have grown and more contributions have gone in, the average fund size that we come across is now £70,000 or £80,000 − and a lot bigger as well.” Traditionally, Flynn notes, advisers have seen people with £400,000 or £500,000 going into drawdown exclusively. Now, however, that’s just not the case. “We’re seeing them taking fixed-term annuities,” he says. “We’re seeing them taking all sorts of different versions and mixing and matching and blending these solutions as well. And as these funds have got bigger, they’re becoming more important to people. A pot used to be the equivalent of 10% of a customer’s house value. Now it’s equivalent to 60% or 70% − that’s a big part of their wealth and they need to take it seriously.”

The future of pension freedoms in 2025 and beyond

Mixing, matching, and blending solutions

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