The pension freedoms officially came into being last week, and unsurprisingly, it meant a lot of people had questions. Industry analysis shows just how quick off the mark people were, with enquires to pension companies seeing a significant surge in the immediate aftermath of Pension Freedom Day.
The Association of British Insurers (ABI) has revealed that its members handled 229,932 calls in the first week of the pension reforms being implemented, an increase of 214% compared with average call volumes. In fact, between 7 and 10 April, members received an average of 57,483 calls per day from customers seeking more information on their pension options, as well as over 10,000 daily written and email requests, more than double the average amount.
Rob Yuille, ABI's manager of Retirement Policy, commented: "Unsurprisingly, many customers, recognising the importance of the reforms, are contacting their pension provider to understand how the changes may affect them. Insurers have taken steps to meet this demand, and will continue to explain to customers their options, and encourage them to speak to the free, impartial Pension Wise service before taking any action."
One of the freedoms that's garnered the most attention is the ability to withdraw the entire pot as cash, following the reduced tax liabilities compared with the previous system. According to retirement income solutions provider Canada Life, almost 75% of retirement-related calls received in the wake of the reforms were from individuals who were interested in cashing in their pensions, with the rest considering annuities or drawdown in equal measure.
Other providers noted similar findings: feedback from ABI members also revealed that a large number of enquiries were from customers seeking information on how to release cash, while research from Aegon found that 31% of customers were interested in accessing their pot. However, once they realised the financial repercussions of taking a full lump sum, one in six said that they would reconsider the move, highlighting the need to seek suitable advice before action is taken.
Were you one of the thousands to call your pension provider in the last week? There's certainly a lot to think about, and with the reforms offering more flexibility than ever, it's vital to understand the options. This is even more important if you're thinking of taking the cash – it may sound tempting, but after you've considered the tax and longevity implications, it may not be quite so appealing.
Find out more about the implications of pension freedom
Considering an annuity? Compare rates to get an idea of the income you could receive
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