A decade after the introduction of pension freedoms, fewer than half (47 per cent) of UK savers said they were aware of the options available to them at retirement, and just 27 per cent reported that they understood the reforms and their implications, according to new research by AKG.

The pensions freedom changes, implemented in April 2015, allow people to access their pension funds after the age of 55, taking lump sums, cashing in the whole pot or using income drawdown, while still giving access to lifetime annuities, or a combination of solutions.

According to the research, those who are aware are pleased to have greater freedom for their pension choices, but many worry that their choices could impact future financial security. The results come a decade after the changes to pensions were introduced.

Of those aware of the changes, 71 per cent of savers said they valued the flexibility afforded, but 45 per cent said they were worried that the ability to draw on funds could leave them without sufficient money in retirement.

Among advisers, there was also concern that flexibility to withdraw funds early could cause savers problems in retirement. Forty-three per cent said that increased flexibility was confusing clients, while 41 per cent said it increased the risk of people exhausting their funds.

Poor take-up of advice is also a concern, with many savers navigating their financial options without professional help. According to the report, only 29 per cent of consumers say they would turn to a financial adviser, and just 20 per cent would be prepared to pay for financial advice.

AKG communications director, Matt Ward, 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.”

The research was sponsored by Standard Life and Fidelity Advisor Solutions.

Standard Life’s head of retail intermediary distribution, Warren Bright, commented: “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.”

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