Pension Reform
Why it’s time to reboot our retirement thinking
Retirement isn’t as straightforward as it used to be. While for previous generations, it marked a fixed point in life, it has since evolved into a much more dynamic and uniquely personal journey.

Power and pressure of the pension freedoms
Pension freedoms were a notable turning point. The new rules gave people more options over how and when they could access their pension savings – and income drawdown quickly became the go-to option for the vast majority of retirees.
While the freedoms were undoubtedly a positive move, more choice breeds more complexity – and, for those using drawdown, the responsibility for deciding where to invest, when to withdraw and how to make their money last rests squarely on their shoulders.
With people living longer lives, a modern retirement can stretch for 30 years or more. That’s a long time for people to effectively manage a finite pot of money - especially when market volatility, rising inflation and global unpredictability all have the potential to derail the best-laid retirement plans overnight.
Not everyone feels equipped to handle this level of financial management. And with less time to bounce back from a mistake, every decision carries a greater emotional burden to get right.
Search for certainty and flexibility
According to research from the Standard Life Centre for the Future of Retirement, more than half of Britons say changes in the world have made them feel less certain about their future finances (57%). At the same time, 71% say they have a more cautious attitude towards their finances because of cost of living issues.
In this climate of uncertainty, it’s perhaps unsurprising that more people are turning back to the comfort of a guaranteed income. Indeed, annuity sales in the UK hit decade-high levels in 2024. This record-breaking year was also boosted by some headline-grabbing annuity rates. Standard Life’s Annuity Rates Tracker reported average rates of 7.72% in May 2025 – the highest in ten years.
But this annuity resurgence doesn’t tell the whole story. The Standard Life Centre’s research shows that while 89% of people want their pension savings to deliver a guaranteed income, 79% also want flexible access to their money.
This isn’t a contradiction; it’s the new reality. People want enough certainty to cover essentials, while holding on to the financial freedom to adapt to life’s twists and turns.
Delivering the best of both worlds
To meet the shift in consumer demand, the industry is innovating. Blending guaranteed income together with solutions such as smoothed funds help to provide a base level of guaranteed income, with additional funds available for discretionary spending or unexpected costs whilst managing volatility.
We’re also seeing a growing number of new fixed-term annuity products entering the market. These offer a guaranteed income for a set period – without the lifelong commitment of traditional annuities. They can be particularly useful for the 42% of people who plan to ease into retirement by reducing their working hours, helping to bridge the gap in income during that gradual transfer.
Gaining a deeper understanding of our emotional triggers
To connect people with the solutions that are right for them, we must look further than the retirement income decisions people make – and put more emphasis into understanding why they’re making them.
People don’t make their retirement choices in a vacuum. They’re shaped by their emotions, biases, and psychological responses to uncertainty. And, regardless of what product they ultimately choose, these dimensions of their personality can often have a negative impact on their long-term financial goals.
As an example, research from Oxford Risk shows that emotional reactions to market movements can cost investors around 3% each year. This could result in a significant loss, especially when recovery time is limited.
Advice that goes beyond the numbers
In this changing world, financial advice must also look to evolve – both in terms of how advisers approach their retirement income conversations and how they offer emotional support to their clients, especially in times of adversity. Given the close relationships most advisers already have with their clients, there’s arguably no one better placed to make this shift.
Technology and AI can play a key role here. Scalable behavioural tools are already helping advisers deliver more personalised, empathetic support. From nudging better choices to simulating future outcomes, tech can enhance advice for tomorrow’s retirees – one that’s as human as it is data-driven.
Re-designing retirement for real life
Our view is that our nation’s approach to retirement needs a re-think. Not just in terms of how we structure income, but also how we support people through one of life’s biggest transitions. To do that properly, providers will need to innovate, advice will need to evolve, and policymakers will need to enable.
The future of retirement won’t be defined by a binary choice between income guarantees or financial freedom – it’ll be shaped by how we can best integrate both and put greater customer understanding at the core.
Find out more about our retirement income options.