Pension providers inundated with calls from people seeking to
withdraw cash and consider their options, following introduction of new
access rules
A speedboat, a Bentley, a holiday home in France and a child’s
wedding are among the purchases over-55s have asked to withdraw pension
money to fund since new rules on access to retirement funds came into
force on Monday.
Standard Life, one of the country’s biggest pension providers, said it had received more than 3,000 calls since the start of the week when the pension freedoms began. Most were from people keen to understand their options rather than to withdraw the money then and there, said the insurer.
However, the firm allows customers to cash in pots worth up to £50,000 online by ticking a number of boxes to confirm they understand the implications of what they are doing. It said 1,000 people had already done so.
Jamie Jenkins, Standard Life head of pensions strategy, said calls had come from people with small pension pots wanting to know how to cash them in. “It has been interesting to see the wide variety of reasons people have given – everything from paying off debt to purchasing a speedboat,” he said.
Jenkins did not say how much his customer withdrew to buy the boat but the average cost of the most popular model of speedboat, a Bayliner, on website boatshop24.co.uk is between £8,500 and £17,500.
Another customer wanted the money to pay for their daughter’s wedding, while others have chosen to cash in part or all of their pot to pay off debt or invest in property.
Scottish Widows said it had taken about 3,000 calls on both Tuesday and Wednesday, which is also three times its normal volume. However, a spokesman said it was also getting “hundreds of online instructions” from customers wishing to cash in their pots.
“Calls are mixed,” he said. “Many people are just looking for information on what their options are and what they should do next.”
Fidelity said calls to its retirement line were about four times the normal volume.. Of those that were requests to withdraw money, around one fifth wanted to cash in their pension pot in full.
“The calls have been varied but one came from a divorced lady who cashed in her pension pot to purchase her ex-husbands’ half of their holiday home in France,” said a spokeswoman.
Another customer cashed in their pension pot worth just under £1m, even after Fidelity had explained they would pay tax of 45% on most of it. The customer didn’t mind, said Fidelity, as they were expecting to pay 40% tax on their income throughout retirement anyway.
Hargreaves Lansdown has had a four-fold increase in calls on retirement compared to the same week in 2014.
Some of the more unusual things Hargreaves’ clients said they would be spending on included a deposit for a Bentley, a flat in New York for a child, a house in Spain and a cruise. One caller said he intended to spend it on “booze and Thai women”.
Head of pensions, Tom McPhail, said : “We’ve seen some slightly unexpected activity; for example, existing drawdown investors choosing to cut their income withdrawals now, in order to be able to take larger lump sums later.”
Insurer LV= said it had taken triple the normal volume of calls about drawdown, one of the ways to access pension money, since 6 April. This follows a 15% increase in calls in the runup to the reforms.
“Many customers are asking if they can increase the income they can drawdown,” said a spokeswoman for LV=. “From the calls we have received this week, it is clear that there is a basic level of awareness of the reforms amongst those approaching retirement, but most are seeking more information about their options rather than looking to make an immediate decision.”
Aegon said it had seen an increase of just over 3,000 calls received, compared to the first day of the tax year in 2014. And call volumes were up nearly 42% on the calls received last week.
“Surprisingly, we’ve received a number of calls from customers expecting to be able to sell their annuities now, despite this not being available until at least 2016,” said Tommy Young, chief operating officer at Aegon.
“We’ve also received a number of inquiries from customers thinking they will be able to access their retirement savings immediately, just like they do their bank account and expect to be able to withdraw money as and when they like without having to complete any forms.”
He said that some customers had also reconsidered their actions. “One example was a personal pension customer, when asked if they were aware of their options and had sought advice, they replied ‘yes, I spoke to my friends’. However, once they heard the risk warnings, they admitted to being unaware of the tax implications and decided not to proceed before speaking to an adviser.”
The Guardian has also learned that customers of some of the country’s biggest pension providers are experiencing waits of up to two hours to get through to an adviser on the phone. This is despite the fact that most providers have taken on hundreds of extra staff.
Standard Life, one of the country’s biggest pension providers, said it had received more than 3,000 calls since the start of the week when the pension freedoms began. Most were from people keen to understand their options rather than to withdraw the money then and there, said the insurer.
However, the firm allows customers to cash in pots worth up to £50,000 online by ticking a number of boxes to confirm they understand the implications of what they are doing. It said 1,000 people had already done so.
Jamie Jenkins, Standard Life head of pensions strategy, said calls had come from people with small pension pots wanting to know how to cash them in. “It has been interesting to see the wide variety of reasons people have given – everything from paying off debt to purchasing a speedboat,” he said.
Jenkins did not say how much his customer withdrew to buy the boat but the average cost of the most popular model of speedboat, a Bayliner, on website boatshop24.co.uk is between £8,500 and £17,500.
Another customer wanted the money to pay for their daughter’s wedding, while others have chosen to cash in part or all of their pot to pay off debt or invest in property.
Scottish Widows said it had taken about 3,000 calls on both Tuesday and Wednesday, which is also three times its normal volume. However, a spokesman said it was also getting “hundreds of online instructions” from customers wishing to cash in their pots.
“Calls are mixed,” he said. “Many people are just looking for information on what their options are and what they should do next.”
Fidelity said calls to its retirement line were about four times the normal volume.. Of those that were requests to withdraw money, around one fifth wanted to cash in their pension pot in full.
“The calls have been varied but one came from a divorced lady who cashed in her pension pot to purchase her ex-husbands’ half of their holiday home in France,” said a spokeswoman.
Another customer cashed in their pension pot worth just under £1m, even after Fidelity had explained they would pay tax of 45% on most of it. The customer didn’t mind, said Fidelity, as they were expecting to pay 40% tax on their income throughout retirement anyway.
Hargreaves Lansdown has had a four-fold increase in calls on retirement compared to the same week in 2014.
Some of the more unusual things Hargreaves’ clients said they would be spending on included a deposit for a Bentley, a flat in New York for a child, a house in Spain and a cruise. One caller said he intended to spend it on “booze and Thai women”.
Head of pensions, Tom McPhail, said : “We’ve seen some slightly unexpected activity; for example, existing drawdown investors choosing to cut their income withdrawals now, in order to be able to take larger lump sums later.”
Insurer LV= said it had taken triple the normal volume of calls about drawdown, one of the ways to access pension money, since 6 April. This follows a 15% increase in calls in the runup to the reforms.
“Many customers are asking if they can increase the income they can drawdown,” said a spokeswoman for LV=. “From the calls we have received this week, it is clear that there is a basic level of awareness of the reforms amongst those approaching retirement, but most are seeking more information about their options rather than looking to make an immediate decision.”
Aegon said it had seen an increase of just over 3,000 calls received, compared to the first day of the tax year in 2014. And call volumes were up nearly 42% on the calls received last week.
“Surprisingly, we’ve received a number of calls from customers expecting to be able to sell their annuities now, despite this not being available until at least 2016,” said Tommy Young, chief operating officer at Aegon.
“We’ve also received a number of inquiries from customers thinking they will be able to access their retirement savings immediately, just like they do their bank account and expect to be able to withdraw money as and when they like without having to complete any forms.”
He said that some customers had also reconsidered their actions. “One example was a personal pension customer, when asked if they were aware of their options and had sought advice, they replied ‘yes, I spoke to my friends’. However, once they heard the risk warnings, they admitted to being unaware of the tax implications and decided not to proceed before speaking to an adviser.”
The Guardian has also learned that customers of some of the country’s biggest pension providers are experiencing waits of up to two hours to get through to an adviser on the phone. This is despite the fact that most providers have taken on hundreds of extra staff.
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