More than £70bn in pension cash has been accessed flexibly 10 years on from 2015’s pension reforms.
In the decade since, Brits have been able to take control of how they spend their money, said AJ Bell’s director of public policy Tom Selby.
Though, Selby acknowledged pension freedoms have not come without risks and challenges.
Figures from HMRC showed a total of £72.2bn in pensions have been accessed flexibly since April 2015.
Selby said: “It is almost a decade since then chancellor George Osborne’s shock pension freedoms announcement, arguably the most significant pension tax reform in almost a hundred years and a reform which has revolutionised the retirement income market.”
Before the changes, most people bought an annuity with their existing provider and now, most choose to stay invested through drawdown.
Selby added: “Handing people total freedom over how they spend their own money also comes with risks and challenges
“Keeping your money invested through drawdown requires engagement, ideally with the help of a regulated adviser, to ensure you are managing your withdrawals sustainably. Anyone who takes too much, too soon from their retirement pot will run the risk of exhausting their fund too early.”
Selby said financial advice is key to people making good financial decisions in this area and anticipated the Financial Conduct Authority’s advice guidance boundary review could enable firms to offer more useful guidance through targeted advice.
“Promoting the benefits of regulated advice, which remains the gold standard when it comes to helping people make good financial decisions, is also crucial,” said Selby.
tara.o'connor@ft.com
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