Financial firms have fielded calls from thousands of older people
keen to take advantage of the new freedoms on pensions, some of whom
were asking to take all their money out in one go.
One of the first people to cash in some of his pension was retired accountant Michael Gunn, 57, who was due to receive the first payment from his fund on Tuesday morning. He will use some of the money to help pay for a transatlantic cruise and intends to donate a chunk to a fund to replace a church hall destroyed in an arson attack.
The government will have been relieved that so-called pension freedom day passed off reasonably uneventfully, after warnings from some politicians and financial experts that the new regime could trigger chaos. In March, Britain’s chief financial watchdog said the pensions industry was facing a “Y2K moment” on 6 April – a reference to the Y2K bug, also known as the millennium bug, which some thought would spark mayhem. In the event, it appears a combination of the bank holiday shutdown and warm Easter weather may have helped save the government from the embarrassment of overwhelmed phone lines and website meltdowns on the first day.
The new rules abolish the requirement to convert a pension pot into an annuity – a product that provides an income for life – and leave people free to do whatever they like with their retirement cash. It means more than 300,000 people a year with defined contribution (also known as money purchase) pensions will be able to access them as they wish once they reach 55. They can cash in some or all of their pot and spend the money as they wish – although those withdrawing large sums are likely to incur a hefty tax bill.
About half the UK’s largest pension companies opened to take calls from customers hoping to spend their pots as soon as possible. Lloyds Banking Group, which includes the pension provider Scottish Widows, said it had received between 300 and 400 calls before 3pm. It said it handled a variety of inquiries about the new freedoms, and that of those people looking to take action, some wanted to cash in part or all of their pension, while others were asking about drawdown, which is where an individual draws an income from their pension pot and chooses where to invest their cash.
Aviva and Fidelity Worldwide Investment both said their customer call centres had been quiet, while Hargreaves Lansdown said: “It was a bank holiday and the sun was shining, so not surprisingly we have only received a couple of hundred calls so far.”
Tom McPhail, head of pensions research at Hargreaves Lansdown, said relatively few people – just over 7% of callers – were asking to take all their money out in one go. More than 40% were asking about drawdown, with another 17% inquiring about “ad hoc lump-sum withdrawals”.
Gunn, who retired about a year ago, is a customer of the firm and has opted for what is called an uncrystallised funds pension lump sum, which leaves his pension intact but allows him to withdraw amounts from it. He said he was treating his wife Fiona to a cruise aboard the Queen Mary 2 ocean liner to New York for their 30th wedding anniversary, and would be donating to a fund to build an extension to his local church in Newton Poppleford, near Sidmouth in Devon.
The government, meanwhile, has set up an official service called Pension Wise offering face-to-face, telephone and online guidance, and the Treasury said that more than 750,000 people had visited the website since it opened seven weeks ago. About 1,400 people have booked telephone guidance appointments, while face-to-face sessions begin today, with about 380 sessions booked so far. “Calls have been coming through steadily (and as expected on a bank holiday Monday) but the call centre has capacity and no issues have been reported,” said the Treasury.
The quieter-than-expected first day will have disappointed car dealers, holiday firms and others hoping for a bonanza.
Twitter users had quipped that Britain’s roads would be immediately congested with wealthy over-55s test-driving Lamborghinis and, while it is early days, such predictions appear to be wide of the mark.
“As yet, no,” replied Edward Alexander at Lamborghini Sevenoaks, when the Guardian inquired if there had been a rush by affluent Kent pensioners keen to splash out on a £185,000 Huracán or £270,000 Aventador. “The crowds seem to be controlling themselves,” he joked.
Alexander, the showroom manager, added: “We do get a lot of inquiries about our cars, but as yet, no one who has said they are going to cash in their pension and go for a Lamborghini.”
It was pensions minister Steve Webb who said last year that people could invest their post-work nest egg in one of the luxury sports cars if they wished. During the past few days he has been keen to stress that there was “nothing magical” about 6 April, and that for many people, the best advice was to wait and see what products became available.
On BBC Radio 4’s Today programme, he described 6 April as “a starting gun, not a deadline,” and rejected as “nonsense” suggestions that as many as two million people would be cashing in their retirement pots straightaway. Many over-55s would, he said, carry on working and saving for many years.
One of the first people to cash in some of his pension was retired accountant Michael Gunn, 57, who was due to receive the first payment from his fund on Tuesday morning. He will use some of the money to help pay for a transatlantic cruise and intends to donate a chunk to a fund to replace a church hall destroyed in an arson attack.
The government will have been relieved that so-called pension freedom day passed off reasonably uneventfully, after warnings from some politicians and financial experts that the new regime could trigger chaos. In March, Britain’s chief financial watchdog said the pensions industry was facing a “Y2K moment” on 6 April – a reference to the Y2K bug, also known as the millennium bug, which some thought would spark mayhem. In the event, it appears a combination of the bank holiday shutdown and warm Easter weather may have helped save the government from the embarrassment of overwhelmed phone lines and website meltdowns on the first day.
The new rules abolish the requirement to convert a pension pot into an annuity – a product that provides an income for life – and leave people free to do whatever they like with their retirement cash. It means more than 300,000 people a year with defined contribution (also known as money purchase) pensions will be able to access them as they wish once they reach 55. They can cash in some or all of their pot and spend the money as they wish – although those withdrawing large sums are likely to incur a hefty tax bill.
About half the UK’s largest pension companies opened to take calls from customers hoping to spend their pots as soon as possible. Lloyds Banking Group, which includes the pension provider Scottish Widows, said it had received between 300 and 400 calls before 3pm. It said it handled a variety of inquiries about the new freedoms, and that of those people looking to take action, some wanted to cash in part or all of their pension, while others were asking about drawdown, which is where an individual draws an income from their pension pot and chooses where to invest their cash.
Aviva and Fidelity Worldwide Investment both said their customer call centres had been quiet, while Hargreaves Lansdown said: “It was a bank holiday and the sun was shining, so not surprisingly we have only received a couple of hundred calls so far.”
Tom McPhail, head of pensions research at Hargreaves Lansdown, said relatively few people – just over 7% of callers – were asking to take all their money out in one go. More than 40% were asking about drawdown, with another 17% inquiring about “ad hoc lump-sum withdrawals”.
Gunn, who retired about a year ago, is a customer of the firm and has opted for what is called an uncrystallised funds pension lump sum, which leaves his pension intact but allows him to withdraw amounts from it. He said he was treating his wife Fiona to a cruise aboard the Queen Mary 2 ocean liner to New York for their 30th wedding anniversary, and would be donating to a fund to build an extension to his local church in Newton Poppleford, near Sidmouth in Devon.
The government, meanwhile, has set up an official service called Pension Wise offering face-to-face, telephone and online guidance, and the Treasury said that more than 750,000 people had visited the website since it opened seven weeks ago. About 1,400 people have booked telephone guidance appointments, while face-to-face sessions begin today, with about 380 sessions booked so far. “Calls have been coming through steadily (and as expected on a bank holiday Monday) but the call centre has capacity and no issues have been reported,” said the Treasury.
The quieter-than-expected first day will have disappointed car dealers, holiday firms and others hoping for a bonanza.
Twitter users had quipped that Britain’s roads would be immediately congested with wealthy over-55s test-driving Lamborghinis and, while it is early days, such predictions appear to be wide of the mark.
“As yet, no,” replied Edward Alexander at Lamborghini Sevenoaks, when the Guardian inquired if there had been a rush by affluent Kent pensioners keen to splash out on a £185,000 Huracán or £270,000 Aventador. “The crowds seem to be controlling themselves,” he joked.
Alexander, the showroom manager, added: “We do get a lot of inquiries about our cars, but as yet, no one who has said they are going to cash in their pension and go for a Lamborghini.”
It was pensions minister Steve Webb who said last year that people could invest their post-work nest egg in one of the luxury sports cars if they wished. During the past few days he has been keen to stress that there was “nothing magical” about 6 April, and that for many people, the best advice was to wait and see what products became available.
On BBC Radio 4’s Today programme, he described 6 April as “a starting gun, not a deadline,” and rejected as “nonsense” suggestions that as many as two million people would be cashing in their retirement pots straightaway. Many over-55s would, he said, carry on working and saving for many years.
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