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AKG’s research paper - 'Freedoms Revisited: Where do we go from here?

12 July 2022

AKG believes the hard work has only just begun for the industry although advisers questioned say they were starting to see a genuine evolution in consumer attitudes with changes to how people prepare and save for retirement. 

The paper illustrates that the return of high inflation and cost of living concerns are challenging current thinking for both consumers and advisers.

Consumer research indicates that a clear top three factors are concerning people:

  • Running out of money (42%)
  • Impact of inflation/cost of living (40%) and
  • Care costs in older age (31%).

Meanwhile, the top two concerns that adviser survey respondents have for their clients are:

  • Investment volatility (67%) and
  • the Impact of rising long-term inflation (59%).

AKG conducted three separate complementary market research exercises with both consumers and advisers including a qualitative study with senior executives at advice/planning and employee benefit firms which found real optimism about the success of pension freedoms.

Alastair Black, head of industry change at abrdn said: “Whether the cost of living crisis is short or long lived, it is a reminder about the importance of financial planning. For clients pre-retirement the current economic conditions may have a long-term impact on their plans if they cannot afford to save as much.”

Communications Director at AKG, Matt Ward, commented: “Concerns around inflation and cost of living crisis are a very real threat and issue for people across the country and will have a direct impact on the considerations of pensions customers across age groups and whether in accumulation or decumulation pension phases. We have had such a prolonged period of low inflation that a lack of inflation may be almost baked into people’s assumptions and their positions/plans could be heavily destabilised.” “The industry therefore needs to be both helpful, practical and realistic in the way in which it seeks to educate and address these issues with a wide range of pensions customers.”