It feels like a lifetime ago now, but April 2015 marked a truly seismic shift in the retirement planning landscape. Pension freedoms landed—suddenly and dramatically—granting retirees access to their pension pots in a way that was unthinkable before. Gone was the default path to annuity. In came flexibility, choice, and, for advisers, a brand-new set of challenges and opportunities.
So here we are, ten years later. Have those freedoms delivered on their promise? What have clients really gained? And what does the future hold for the next wave of retirees?
In a recent podcast, IFA Magazine sat down with Ed Monk, Associate Director at Fidelity International, who’s been digging into a decade’s worth of data and outcomes. Spoiler alert: it’s mostly good news—but with some hefty caveats that advisers will want to keep front and centre.
The first drawdown generation
Let’s be honest, the first cohort of retirees post-2015 got very lucky.
As Ed pointed out, while markets certainly threw up some wobbles—a pandemic, political upheavals, and a war or two—returns across the decade were broadly strong. And those who were in drawdown, particularly those with significant equity exposure, came out well ahead.
Fidelity’s research modelled two scenarios: a 100% global equity portfolio and a classic 60/40 equity-bond split. In both cases, the results were impressive—especially for those sticking to the fabled 4% withdrawal rule. In fact, someone withdrawing 4% a year (increasing with inflation) from a £100k pot in 2015 would still have nearly £189,000 left today. That’s after a decade of income. Not bad at all.
Even those drawing 7% a year saw their pots holding up better than expected. “That challenges the conventional wisdom around the historical safe withdrawal rate,” Ed noted. “It reminds us that 4% is highly cautious, based on worst-case scenarios across multiple time periods. But in this real-world example, it undershot what people actually could have afforded to take.”
Past performance… yes, you know the rest
Now before we all start reworking income strategies and boosting withdrawal rates, let’s bring it back to reality.
As every adviser knows, one good decade does not a lifetime strategy make. The last ten years were buoyed by strong US market performance—those Magnificent Seven tech stocks certainly pulled their weight—and relatively benign inflation for much of the period. Not to mention, rock-bottom interest rates supported equity valuations for longer than anyone expected.
The takeaway? While the outcomes have been encouraging, they were helped along by favourable conditions that simply can’t be guaranteed going forward. Advisers should resist the temptation to assume these kinds of returns are baked into the future.
In Ed’s words, “It’s a very unique period. Every period is unique—but this one particularly so.”
Is 4% the magic number (or not?)
The 4% rule continues to spark debate. Is it still a useful starting point for retirement income planning? Or does it risk holding clients back from enjoying their money while they can?
The answer, of course, is: it depends.
Advisers have long known that a rigid 4% withdrawal strategy doesn’t reflect the real ebb and flow of client needs, market performance, or economic shifts. In the Fidelity study, even a 6% or 7% withdrawal rate would have left clients with more than they started with, ten years down the line.
But that doesn’t mean everyone should pile in and crank up withdrawals.
The value of the 4% rule lies in its conservatism. It sets a safety-first baseline. What advisers can offer is the ability to personalise and adapt from that point—factoring in client goals, flexibility, risk tolerance, and of course, the state of the market.
“The idea isn’t to fixate on 4%,” said Ed. “It’s to understand why that number exists—and then plan around it.”
Sequencing risk in action
If there’s one lesson that stands out, it’s the emotional side of investing—particularly for those new to drawdown. As Ed flagged, the first year of pension freedoms was a rough one for markets. Portfolios were down around 20% within 10 months.
For someone newly retired, watching their pot take a hit while also withdrawing income? That’s a double whammy that can send even the steadiest hands reaching for the panic button.
This is where advisers earn their stripes. Managing sequencing risk isn’t just about portfolio construction. It’s about holding clients’ nerves. Keeping them focused on the long-term plan. Preventing that rash decision to ditch drawdown and lock in losses with an annuity at the worst possible time.
“A big part of the adviser’s role is helping people not make poor decisions,” Ed said. “If you had no one to talk to at that moment, you were far more likely to bail. But with advice? You could ride it out—and be glad you did.”
The real flex in pension freedoms…advice
The research paints a clear picture: the flexibility brought by pension freedoms works best when paired with professional advice.
Flexibility without guidance can lead to some pretty risky behaviour. People taking large lump sums without considering tax implications. Clients over-exposing themselves to volatility. Or just under-spending out of fear that they’ll run out.
“Used correctly, drawdown gives you way more control,” said Ed. “But it comes with risk. That’s what advice helps mitigate.”
And it’s not just about asset allocation or safe withdrawal rates. The behavioural coaching, the personalisation, the reassurance—it all adds value that goes far beyond the numbers on a spreadsheet.
Diversification is not dead, just different
One of the hot questions right now is whether the traditional 60/40 portfolio still does the job.
With bonds having a rough time in recent years, some commentators have sounded the death knell. But Ed disagrees.
“Bonds have struggled—but they still play a role,” he said. “That 60/40 portfolio still delivered good outcomes in our model. Yes, equities outperformed, but the 60/40 ride was much smoother.”
And that smoother ride matters, especially for those who can’t stomach big drawdowns in the early years of retirement. Emotional reactions to market swings can be damaging. Diversification helps take the edge off.
That said, it’s worth thinking more broadly. Gold, commercial property, cash buffers—there’s life beyond bonds. Especially in a world of higher rates and more persistent inflation. The key is to build a mix that reflects each client’s individual risk tolerance and income needs.
Can the next decade deliver?
It’s tempting to look back on the last ten years and assume we’re on a golden path. But the reality is, we might not see such favourable conditions again for a while. Inflation remains sticky. Rates are higher. Equity valuations look stretched in some areas.
So, what should advisers be preparing clients for?
First, temper expectations. We’re coming off a decade of strong performance, but there’s no guarantee the next ten years will follow suit. Building resilience into plans—through cash buffers, diversified income sources, and flexible withdrawal strategies—will be key.
Second, continue championing the value of advice. As Ed noted, even the most financially literate individuals (himself included) benefit from a second pair of eyes when it comes to retirement income planning. There’s just too much at stake.
And third, keep reminding clients that flexibility is a gift—but it comes with responsibility. Pension freedoms offer huge potential, but they work best when there’s a clear plan and someone to guide them through the highs and lows.
Pension freedoms, a decade on
So, has the pension freedoms experiment been a success? On balance, yes. The data from Fidelity shows that, for those who invested sensibly and stayed the course, the results have been better than expected. Income has flowed, pots have grown, and clients have enjoyed a level of control previous generations could only dream of.
But it’s also clear that this freedom is not without risk. Markets don’t always play nice. Behavioural missteps can be costly. And not everyone understands the implications of their choices without support.
That’s where you come in. For financial advisers, this anniversary is a timely reminder of the critical role you play in turning freedom into financial security.
Here’s to the next ten years—and all the opportunities they’ll bring.
Tune in….and take a look
If you liked the sound of what Ed had to say, tune in to the podcast to listen to the full episode: https://ifamagazine.com/podcast-116-a-decade-of-pension-freedoms-success-challenges-and-the-future-of-retirement-planning-with-ed-monk-associate-director-at-fidelity-international/.
You can also find Fidelity’s full analysis here: Retired 10 years ago with £100k – how much is left?
About Ed Monk
Ed Monk joined Fidelity in 2016 following a 13-year career in newspaper journalism, most recently as Investment Editor at The Daily Telegraph. He was previously News Editor and Personal Finance Editor for Thisismoney.co.uk, the money channel for Mail Online and has contributed articles to the Daily Mail.
