Despite the success of pension freedoms, the industry has warned that there are still challenges in the form of lack of guidance and taxation, with research showing that 25 per cent of savers are unsure they understand the options and rules surrounding them.

Amid the 10-year anniversary of pension freedoms, industry experts have been reflecting on the impact of the initiative on the pension industry.

Standard Life retirement savings director, Mike Ambery, noted that “with greater freedom” comes “greater individual responsibility", pointing out that a number over 55s have found that pension freedoms are “overwhelming” and “the options confusing”.

Indeed, research from Standard Life found that almost a quarter (25 per cent), of individuals who are aware of pension freedoms are unsure they understand the options and rules surrounding them.

Furthermore, the research found that almost half (49 per cent) like having the choice on how to access their pension, but 15 per cent of over 55s say they feel ‘overwhelmed’ at the options of accessing their pensions, with 7 per cent not taking from their pensions due to confusion around their options.

“The fact that retirement saving is often not seen as an immediate priority and there’s a perception that pensions can be quite complex has led to people lacking education around and engagement with their pension," he continued.

“Improving access to affordable financial advice is key to improving people’s confidence and chance of securing good retirement outcomes."

These concerns were mirrored by Hymans Robertson head of DC at-retirement services, Kathryn Fleming, who argued that the first decade have been a “minefield” for many members.

“The combination of pension freedoms and the current low average DC pot sizes means that DC savings are thought of as ‘money’ not ‘pension’. That really changes how members use their savings – with around only 10 per cent of pots accessed since the introduction of the freedoms being used to buy annuities,” she stated.

However, Fleming suggested that in the next 10 years, DC saving assets will “increasingly” become the “main source of income for retirees”.

She explained that this means “pension freedoms could be a powerful tool” to enable “members to personalise and maximise their retirement incomes, by being able to flex and intertwine them with other savings and assets”.

Fleming stressed that this will only be “feasible” if they are “accessed with appropriate support” and pension freedoms “increase the pressure on the industry to get the guidance and advice support right”.

Adding to this, AJ Bell director of public policy, Tom Selby, said freedom pensions are “arguably the most significant pension tax reform in almost a hundred years”.

“Changes have been widely welcomed by savers, with more than £70 billion of pension cash accessed flexibly since 2015, according to the latest HMRC figures,” he stated.

However, in addition to a lack of guidance, Selby noted that, “there remains an issue with the way withdrawals are taxed by HMRC. Since 2015, HMRC has chosen to tax the first flexible withdrawal someone makes in a tax year on a ‘month 1’ basis".

Indeed, the latest data showed that HMRC has repaid a total of £38,784,733 from 1 October 2023 to 31 December 2023, meaning that nearly £1.2bn has been reclaimed by people overtaxed by pension withdrawals since 2015.

“It is high time these systems were upgraded so people who use the freedoms as intended aren’t forced to go crawling to the Revenue to get their money,” Selby added.

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