If you're approaching retirement, you were probably waiting with baited breath for the pension reforms to come into force. Did you take advantage of the chance to withdraw the cash from your pot? You may have been tempted, but chances are, the initial rush of expectation has subsided.
Now that the dust has settled, research from Scottish Widows reveals that customers are taking more time to consider their options following the initial dash for cash. Most are making increasing use of the Government's Pension Wise service, too, suggesting that many are taking a more measured, responsible approach to decision-making.
The figures show that, from the initial surge at the beginning of April until the middle of May, the pension provider has seen a 72% drop in full pension encashment requests. In the last few weeks, full pension encashment requests accounted for around 50% of customer intentions compared with more than 70% in the first few weeks of the new pension freedoms, showing that people are no longer as keen to go the whole hog.
The figures also revealed that those seeking to withdraw their full pension typically had smaller pots: the average size of pot being cashed in was less than £20,000, with 85% of full withdrawal requests being for pots of less than £30,000.
Demand for advice remains high, however, with the provider receiving an "unprecedented surge" in online engagement and receiving a call every 10 seconds during the first week of the freedoms. There's also been an increasing proportion of customers wanting to have detailed conversations about their pension options, including income drawdown and partial encashment, and requests from those seeking alternative options have now overtaken those looking to cash in their pot.
At the same time, there's been a significant increase in the number of customers consulting Pension Wise first: just 3% did so in the first week of the freedoms, rising to a third a month later. Robert Cochran, of Scottish Widows, commented: "Although our data has shown an increase in Pension Wise awareness, there is still work to do in closing the knowledge gap and encouraging people to use the service to become better equipped to make the right decisions (recent research found that 79% of 50-59 year-olds were unaware of the service and a further 38% were unsure where to go for guidance).
"It's still too early to draw definitive conclusions about the longer term impact of pension freedoms due to the pent up demand of those who deferred until April 6 to access their money, [but] customers are still looking for more help in making the right decisions given the wide range of options now available to them."
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