Freedom Chairman, Charles McManus, featured in FT Advisor on the future of pension technology

Over the past decade, financial technology has reshaped almost every part of the financial system. Payments have become instant, banking has moved to mobile-first models, and investing is more transparent and accessible than ever before.

Yet one of the largest pools of capital in the UK economy, pensions, still rely on infrastructure that feels increasingly out of step with how people manage their money today. That gap becomes most obvious at retirement.

The UK pension system has done a great deal right on accumulation. Auto-enrolment has brought millions into saving, providers have scaled responsibly, and governance standards have improved significantly. But when savers reach the point where they need to turn assets into income, the system shows its age. What should be a smooth transition often becomes fragmented, manual and confusing, at precisely the moment when clarity and confidence matter most.

At its core, the challenge is structural. Pensions were designed to gather money, invest it over long periods, and report on performance at intervals. They were never designed to behave like modern financial infrastructure that supports everyday spending and cash management. When people retire, they suddenly want their pension to do something very different, but the tools available to them have barely evolved.

The default outcome today is asset leakage, or in layman's terms retirees simply "taking the cash" at retirement.

The UK has long held an unhealthy obsession with cash, driven largely by a lack of confidence to invest, fear of risk or concern about changes to tax conditions making cash seemingly more appealing, at least in the short term.

As a result, as people move into retirement, large volumes of pension assets are transferred out of pension wrappers and into retail bank accounts. Providers lose the relationship and the long-term economics that come with it. Members often lose the benefits of staying invested and gain little more than basic transactional convenience. Meanwhile, banks capture payment activity, balances and behavioural data, despite having played no role in the accumulation journey.

This is not a niche issue. On average, one billion pounds leaves pension funds every day, through the decumulation phase. From a provider's perspective, this represents a loss of value and engagement. From a member's perspective, it often leads to poorer outcomes. From a policy standpoint, it highlights a growing disconnect between regulatory intent and real-world behaviour.

The move to fully digital banking was driven by consumer habits and technology, expedited by Covid. By comparison, the way we manage pensions seems anachronistic and analogue.

Regulators have been clear about where they want the system to go. Investment Pathways, Consumer Duty and the growing focus on guided retirement are all attempts to improve outcomes in decumulation and ensure that non-advised customers are better supported. These initiatives are necessary and welcome, but regulation alone cannot resolve an infrastructure problem.

Decumulation remains the weakest part of the retirement journey because it sits between pensions, banking and payments, without being fully owned by any one of them. Responsibility is fragmented, incentives are misaligned, and the experience for retirees reflects that fragmentation. People do not experience their finances in silos, but the system serving them still does.

In retirement, spending is gradual, irregular and deeply personal. People want to access money as they need it, not in rigid blocks or artificial structures. They want visibility, flexibility and reassurance that their money is still working for them. The current system forces them into blunt choices that do not reflect how retirement actually works in practice.

This is exactly the kind of challenge that financial technology is well suited to address, not by disrupting pensions, but by modernising the infrastructure around them. Having spent many years building and backing financial infrastructure businesses, I have learned that lasting value in financial services is created by solving hard, unglamorous problems at scale.

The most successful fintechs are not those that shout the loudest, but those that quietly embed themselves into the fabric of the system and make it work better for everyone involved.

This is why I believe the pension sector is now ripe for a technology upgrade, and why in addition to my existing roles, I have chosen to join the Freedom board as chairman.

Rather than encouraging retirees to move their money out of pensions, the team at Freedom are enabling pension providers to offer bank-like access to retirement savings while keeping assets invested within the pension environment. Payments, accounts and cards sit on top of regulated banking and pension infrastructure, allowing people to spend and manage money without dismantling the structure that supports long-term growth and tax efficiency.

From the retiree's perspective, pensions start to feel intuitive and usable in everyday life. From the provider's perspective, decumulation becomes an extension of the relationship rather than the end of it. From a regulatory perspective, the system begins to reflect how people actually behave, rather than how policy papers assume they should behave.

An important feature of this model is that it is delivered through pension providers themselves, under their own brands. Trust in retirement is built over decades, and the strongest relationships already exist where assets are held. Technology should reinforce those relationships, not replace them.

Pension providers are under increasing pressure to demonstrate better retirement outcomes. Regulators are explicit about expectations. Consumers in later life are far more comfortable using digital financial services than they were even a decade ago.

At the same time, banking and payments infrastructure has matured to the point where compliant, real-time money movement is possible at scale.

Policy direction reinforces this momentum. The focus on productive finance and keeping capital working within the UK system sits uneasily with a decumulation process that routinely pushes assets out of long-term investment structures and into low-yield cash accounts.

The UK has long had a curious relationship with cash and attitude to investing which needs to change. Pointedly, we need to develop a financial planning and investment culture.

We face the perfect storm of an aging population and increasing length of retirement and need to do everything we can to encourage people to both plan ahead better and keep their money invested for longer.

Retaining assets within pensions while improving access aligns commercial, consumer and policy objectives in a way that is rare in financial services.

I have backed a number of fintech businesses over the years and continue to do so. With Freedom, we're not launching just another consumer app or chasing attention. This is about fixing a missing layer in the retirement stack in a way that works for institutions, regulators and, most importantly, retirees.

Freedom recognises that pensions themselves are not broken, but the experience of using them in retirement is. It recognises that the solution lies in orchestration between pensions, banking and payments, rather than forcing people to choose between them. And it recognises that long-term success in this market depends on alignment, with regulation, with provider economics and with real human behaviour.

The biggest opportunities now sit in complex, regulated markets where infrastructure has lagged behind expectations. Retirement is one of the largest and most important of those markets and technology can make this better for both pension providers and their members.

Improving retirement outcomes for millions of people while strengthening the institutions that support them is not just a commercial opportunity. It is the kind of progress that financial technology was always meant to deliver.

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