Standard Life reported an "unprecedented level of customer contact" in the days following 6th April when new pension freedoms came into effect in Britain.
Despite the 6th being a Bank Holiday, the pension providers said it took over 3,000 calls with almost 1,000 customers using Standard Life's website to decide on how to exercise their new found financial freedom.
Last year's budget saw proposed changes to pension legislation allowing savers to claim their entire pension pot from the age of 55, without the requirement of having to purchase an annuity. Now, eligible savers are free to draw down all of their capital should they wish to and spend it however they choose to.
More than 200,000 pension savers seeking investments
It is anticipated that as a result of the new regulations, more than 200,000 eligible pension savers will enter the investment arena both in the UK and overseas, most probably in the real estate sector. The British government have warned new investors to seek advice and undertake their own due diligence, anticipating an increase in unregulated investments or bogus opportunities.
Standard Life reported that among the 3,000 calls taken on 6th April, taking an average of around 30 minutes, some customers chose full or partial withdrawal, planning to use the cash to pay off debt or invest in property. Other reasons for taking cash included poor health, paying for a wedding and buying a speedboat.
Widely varying reasons why savers are choosing to draw down
Jamie Jenkins, head of pensions for Standard Life said: "We are pleased to see so many customers using our new online retirement services but for some, they want to have a conversation with our experts. The length of these conversations is much longer than normal but we think it is crucial to take the time to ensure that people are making fully informed decisions".
"While it is far too early to draw any definitive trends, as expected the main focus this week for those with very small pension pots is to understand their options to release cash and it has been interesting to see the wide variety of reasons people have given – everything from paying off debt to purchasing a speedboat. It serves to remind us how varied people's lives are and in turn the potential benefit of having more flexible access to their pension savings," he added.
Pension Wise prepared for deluge of enquiries
The government-back guidance service Pension Wise has received more than 3,600 calls since its call centre opened two weeks ago with more than 1,400 people booking telephone conversations with the Pensions Advisory Service and 400 making face-to-face appointments with Citizens Advice bureaux around the country.
Pension providers and the British government alike are expecting a huge take-up of new pension freedoms among savers over the age of 55. Pension Wise has a capacity for 10,000 appointments a week during this month and more than 400,000 appointments on an annual basis.
- Monday 13 April 2015