Whatever our personal preferences, we cannot deny the capacity of insurers to take the lion’s share of places at the mega fund table. This diagram is taken from the Impact Assessment of the Pension Bill/Act. Note that the model the Treasury is referring to is that of insurers that have a place providing GPPs and Master Trusts as well as advised and non advised SIPPs.

The Treasury is referring to a model that is represented by L&G, Standard Life, Scottish Widows, Aviva and Aegon. Royal London has no master trust, nor Prudential.

The vision of Reeves and Bell is for funds that have sufficient assets under management for their defaults (both pre and post retirement) to nudge Britain to a better place in economic and social terms.  It is in this context, that I read the following article from AKG, the assessors of  financial strength of commercial pension providers (amidst other things)

Wednesday, 11 June 2025 09:25

Pension Freedoms confusing clients say 2 in 5 advisers

More than two in five financial advisers (43%) say the increased pension flexibility brought about by the Pension Freedoms is confusing clients, according to a new report.

A similar number (41%) of advisers told financial strength ratings specialist AKG that the Pension Freedoms, introduced in 2015, have also increased the risk of retirees exhausting their funds.

Despite 43% of advisers believing clients are confused by the broader range of retirement options, 51% still viewed the introduction of greater flexibility as a positive development for their clients over the past decade.

Consumers surveyed for the AKG report also had concerns about the freedoms. Close to half (44%) said retirement planning had become more confusing since the Pension Freedoms were introduced.

Two thirds (71%) of the consumers surveyed for the report said they valued the ability to access pensions flexibly, but 45% shared worries that having flexibility means they may run out of money in retirement.

Two thirds (59%) of the pension savers said they were actively trying to balance investment risk with their income needs in retirement.

The report also highlighted a sharp divide between advised and unadvised pension savers, as well as a growing advice gap. Only 29% of consumers said they would turn to a financial adviser for support and just 20% said they were willing to pay for financial advice.

Warren Bright, head of retail intermediary distribution at Standard Life, who co-sponsored the report, said the findings highlighted the need for the introduction of targeted support. (Ed – bold)

He said: “The role of advisers has never been more important for society with full financial advice remaining the gold standard. However, if we want to continue revolutionising people’s retirement prospects across the next decade, we need collaboration between government, regulators, providers and advisers to take positive steps towards helping more people when it comes to making major financial decisions around retirement.

“We know that many are unwilling or unable to seek advice and addressing adequacy and access are key. The ongoing consultation on targeted support, if implemented properly, has the potential to address the balance where worryingly 90% of people are making retirement decisions unsupported.”

In February advisers warned the FCA that its proposed introduction of targeted support under the dvice Guidance Boundary Review could cause significant consumer harm if the difference between guidance and advice was not more clearly defined.

The FCA consultation on targeted support is focused on helping consumers understand their choices around pensions and if it could help close the advice gap.

• Opinium Research surveyed 2,000 UK pension savers in March on behalf of AKG. Pureprofile surveyed 100 financial adviser on behalf of AKG on 19 March.

The paper Ten Years of Freedoms – Lessons, Gaps, and the Road Ahead can be downloaded in full from the AKG website.

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Time for big insurers to sound like megafunds

The proportion of the population that use financial advisers to take lifetime lasting decisions on what to do with their pots is likely to fall dramatically once default decumulation funds are introduced, these funds will be able to pay retirement incomes as pensions with protection for people in case they live too long.

The key decisions that people of my age (I am 63) need to take are around how to take money tax efficiently and how to protect partners if they are left on their own. I can see a need for guidance on these matters but not advice, certainly for the majority of people who told the FCA’s lifetime survey that they saw no need to pay people to tell them what to do.

Insurance companies have been working for as long as I’ve been in advice (41 years in October) with advisers to get product out. Retail products such as SIPPs and specialist annuities and drawdown solutions will continue to be marketed by advisers who understand and can advise on tax, investment and holistic financial planning. But this will be a diminishing as pensions return to help those with workplace have simpler and more fulfilling outcomes for the sacrifice they’ve made from their wage packets!

Insurance companies, along with a few master trusts , standalone from GPPs, will own megafunds that will be providers for the bulk of savers and pensioners. When I say “pensioners” I mean it. Pension freedom will be for a minority of those who opt for it.

Support does not need to be targeted, it will be needed by those who want to explore freedom, but all the evidence from auto-enrolment is that only about 10% of us want anything more than a default.