The retirement flexibilities introduced from April 2015 are proving popular. While flexibility is beneficial, it also adds complexity to already difficult retirement decisions that many people may not be able to tackle on their own.

The ABI’s latest analysis dissects how people are using these flexibilities; how well product supply fulfils consumer
needs and demands; as well as what actions stakeholders can take to address challenges that pose significant risks to consumer outcomes.

The aggregate picture is that consumers are behaving sensibly with the new flexibilities and demand for income products is steady. However, there are warning signs that shouldn’t be ignored – most obviously, the behavioural bias to take cash when offered.

Our analysis also shows that appetite for cash is not driven by lack of product supply. For even the smallest pots, there is a range of affordable retirement products. The market has also seen innovation, reflecting long-standing needs for both security and flexibility, and new ways to interact through automated advice and other digital tools. However, innovation is not a panacea; people need to be saving more and sooner.

Any future interventions need to be grounded in a long-term, joined-up strategy across government, based on
a common understanding of good retirement outcomes. Collective action to address challenges will also help to encourage consumer engagement with their pensions, ensuring as many people as possible reach their retirement goals.

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