The cost-of-living crisis is putting the gains from seven years of pension freedoms at risk, AKG's latest independent industry research paper - ‘Freedoms Revisited: Where do we go from here?' - shows.

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

Published on 12 July in partnership with abrdn and Scottish Widows, and available to download at, the paper illustrates that the return of high inflation and cost of living concerns are challenging thinking for both consumers and advisers.

Consumer research indicates that a clear top three factors are concerning people - these being 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%).

Communications director at AKG, Matt Ward, said: "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."

AKG conducted three separate but 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.

Indications from the consumer research that people would trust Financial advisers/planners (31%), Citizens Advice Bureau (23%), Government/Money and Pensions Service (23%) and Pension Wise/MoneyHelper (20%) to give them guidance or advice on retirement options were promising but further awareness work is required here.

Also, interesting was that 18% selected ‘their existing pension product provider' and it continues to make sense that this would be a logical first port of call for clients seeking help with guidance or advice on their retirement options.

Consumers want to see Honesty (45%), Value for money (38%). Clear communications (34%) and Transparency (34%) as the top traits/qualities from their pension provider. Interesting also to see 30% of consumers viewing Advice/guidance as a trait/quality they want from their pension provider. In a market with an obvious advice gap, it makes sense as an option.

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."

Jacques Bezuidenhout, head of retirement solutions at Scottish Widows added: "It is positive to see consumers saving more for retirement and becoming more engaged with their pension. However, concerns remain around the number of customers not seeking advice particularly as defined contribution pension pots become more prevalent."

Swapping the focus to adviser expectations, the top factor selected by survey respondents in terms of the key requirements for providers to be successful with advisers was Competitive charges which provide value for money (79%). This echoes some (value for money) sentiment from the consumer research, but certainly serves to underline the level of competition which exists in the market when it comes to charging levels.

Completing the top five factors selected and setting the blueprint, in adviser's eyes, were Service delivery standards (65%), Digital/online capability and functionality (57%), Range of product/fund solutions (55%) and Financial strength/sustainability (51%).

These represent the core operational requirements, business disciplines and deliverables for providers to be successful.

Finally, commenting on the impact of inflation and investment volatility on drawdown, Ward said: "From an adviser perspective inflation and investment volatility represent key retirement planning concerns for clients and hence clients will need to be warned about potential impacts.

"Whilst economic backdrop and markets had been relatively benign since the pension freedoms changes came into force, income drawdown investment portfolios are now facing a series of challenges and will need to withstand a period of turbulence. Pension assets, and others where support required, will have to sweat for longer."