How to rebuild faith in an unpredictable pensions system | Insight from Nucleus’ Andrew Tully

By Andrew Tully, Technical Services Director, Nucleus

Confidence is the cornerstone of long-term retirement planning, yet for many UK savers, that confidence is in increasingly short supply. In an environment where pension tax rules and policy frameworks are routinely revisited, revised and, at times, reversed, the ability to plan with clarity has been significantly undermined.

In this article for IFA Magazine, Andrew Tully, Technical Services Director at Nucleus, explores why trust in the pensions system is deteriorating, the unintended behavioural consequences of policy speculation, and what providers, advisers and policymakers can do to restore long-term faith in retirement saving.

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Retirement confidence at a low ebb

A constantly shifting retirement landscape, where the goal posts are frequently moved and savers are unsure where to aim to achieve their desired outcomes in later life, means retirement confidence in the UK is low.

Just 26% of adults are confident they will have enough money to live comfortably for the rest of their lives, according to Nucleus’ latest Retirement Confidence Index (RCI) report. The 2025 overall index score stood at 4.2, down from 4.6 the previous year.

Weakening public trust in pensions thanks to frequent legislative changes and tax rule adjustments is a major driver of this decline. Constant tinkering creates confusion and doubt, knocking the confidence of long-term savers.

This can be seen clearly when we consider one recent pensions policy change. The RCI report found nearly half (44%) of savers were worried about pensions being in scope for inheritance tax (IHT) from April 2027.

There is already evidence to suggest proposals around IHT and pensions may be driving unwanted and potentially damaging behaviour. Around one in six middle-aged respondents are paying or will pay less into their pension because of the proposals, according to the RCI report.

When speculation shapes saver behaviour

This trend goes further than changes related to IHT. Recent data from the Financial Conduct Authority highlighted a 29% increase in people taking only tax-free cash from their pensions during 2024/25 when compared with 2023/24. This increase is likely to have been driven by pre-Budget speculation on reducing tax-free cash.

The pattern is clear: speculation breeds uncertainty, and uncertainty triggers less-than-ideal behaviour.

One RCI respondent perfectly articulated the fear and worry that perpetual pensions tinkering brings: “You can’t plan for something that is always a moving target.”

It’s clear that a deep lack of trust is a major driver of nervousness around pensions. Other recent changes that have capacity to cause confusion among savers include reforms to the lifetime ISA, which mean those using it for retirement now face an uncertain future, and forthcoming changes to the tax advantages of salary sacrifice schemes, which may make workplace saving less attractive.

These, combined with the rumours that surface before every Budget, create a system that few savers trust and even fewer can make sense of. People are, understandably, left questioning how best to save for retirement — and indeed whether to bother saving at all.

The adviser’s role in restoring clarity

While policy stability ultimately sits with government, advisers and providers cannot simply wait for certainty to return. Clear, consistent communication is essential in mitigating panic-driven decisions.

Advisers are uniquely positioned to contextualise policy announcements, separate confirmed reform from speculation, and reinforce the long-term principles underpinning retirement planning. Behavioural coaching — helping clients stay focused on objectives rather than headlines — is arguably more valuable now than ever.

There is also an opportunity for firms to proactively engage clients around scenario planning. Demonstrating how retirement outcomes flex under different tax environments can reduce fear of the unknown and shift conversations back to controllable factors such as contribution levels, asset allocation and retirement timing.

Technology and Targeted Support as confidence builders

If we can accept there is a problem with the system, we can begin to find a solution. How can providers, advisers and policymakers work together to rebuild faith in a system that remains essential to financial security in later life?

The upcoming pension dashboard, likely to launch in the first half of 2027, could be a strong starting point. Savers will soon more easily be able to see their complete pensions picture. This should help to boost engagement and understanding — regardless of any tax tinkering currently taking place — and in turn strengthen confidence.

Then there’s the upcoming Targeted Support regime, which will bridge the gap between advice and guidance by grouping together adults with similar needs. Here, large adviser firms can play a role in instilling confidence in many people who may not yet need or desire full financial advice. This also helps to bring them under the umbrella of the financial services system, making them feel listened to and heard, and helping to build trust over time.

The Independent Pensions Commission (IPC) should also play an important role in rebuilding trust in the system. The IPC has been tasked with addressing pensions adequacy, including improving outcomes for low earners, the self-employed and younger workers, and examining why future retirees risk being poorer than current ones. Having a dedicated, consistent body keeping an eye on the pensions system can only improve market outcomes and promote long-term thinking.

Stability must be the long-term objective

Most fundamentally of all, though, there must be a commitment to ending the constant tinkering with UK pensions tax rules. More than anything, savers need a stable system they believe will remain consistent over a long period of time, allowing them to make long-term decisions with confidence.

Rebuilding faith in the pensions system requires stability, clarity and a long-term political commitment to stop treating pensions as a convenient lever to pull at every Budget. Savers need confidence that today’s decisions will not be undermined tomorrow. Without that certainty, trust will continue to erode — and with it, the risk of poorer retirement outcomes will only rise.