For pension nerds such as myself, dinner party conversation starters include the question, 'Where were you when George Osborne announced pension freedoms?'
I was watching the Budget at work when, in the words of one of my colleagues, the then-chancellor "changed flipping everything". His expression was more colourful, but I will leave that to your imagination.
I remember being struck not just by how revolutionary the changes were but by the power of the language Osborne used. No doubt he was trying to emphasise the importance of his announcement and the benefits of the new flexibilities.
However, the things he said that day have arguably had a profound effect on how successful the policy has been in practice, and still present challenges today.
“No one will have to buy an annuity” was seemingly interpreted by many as 'no one should buy an annuity'. Annuity sales plummeted, even though consumer surveys consistently reported that what many people wanted in retirement was a secure lifetime income.
Even today, with rates looking far more attractive, annuities still have a poor perception.
“People… should be trusted with their own finances” – this feels instinctively right, but that then raised a real problem for the financial services industry and its regulators.
If people were to be trusted with their own finances, then how far should the industry go to direct them from pursuing a path that many of us would say is not in their best interests?
There was also a guarantee that everyone "will be offered free, impartial, face-to-face advice". We were offered PensionWise, now MoneyHelper, which is a great service but is a long way from the personalised advice that we have seen is needed.
In this context, what do we define as a 'good retirement outcome'? The client being able to buy the sports car they have always dreamt of or having a reliable lifetime income?
And what does it mean for those giving retirement advice? Are they to help clients pursue their financial goals or to save them from themselves? The reality is that, despite the rhetoric, advisers are expected to point clients towards sound retirement decisions, not just implement their wishes.
Pension freedoms has undeniably helped the advice industry. But after what has been a relatively benign environment for retirement advice, we are now facing challenges on all fronts.
Markets remain volatile and, in our opinion, are now entering a new inflationary cycle characterised by de-globalisation and decarbonisation.
Returns will be harder to come by and risk is everywhere. The increased cost of living will mean retirees will need more from their retirement savings while their children are facing even greater pressure from increased housing costs.
Higher interest rates are leading some to turn away from investing. Frozen personal allowances, reducing tax thresholds and the changes to pension allowances increase the opportunity for effective tax planning, but there is huge uncertainty around future policy, increasing the risk for clients and their advisers.
