Pension providers expecting 40% surge in inquiries after rule-change

Rules coming into effect on 6 April allow over-55s free access to retirement funds, although pension providers are encouraging people not to rush into decisions

From 6 April anyone over the age of 55 will be able to take what they want, when they want, from their pension funds. Photograph: E. M. Welch/Rex/E. M. Welch/Rex

 

 Pension providers are expecting to take as many as 40% extra calls from customers next week as thousands of over-55s try to take advantage of new rules which come into force in one week’s time and allow them access to their retirement savings.

However, despite the anticipated surge in customer inquiries, a Guardian survey found that half of the major pension providers will not be open for business on Monday 6 April, a bank holiday.

Almost all of the 12 major pension providers surveyed have taken on extra staff to cope with demand, with one, Scottish Widows, anticipating up to two years’ worth of inquiries in the first few months of the freedoms coming into effect.

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“We strongly recommend that customers take their time and not rush these decisions too quickly given the complexity and risks involved,” said a spokesperson for the company.

Another, Royal London, said it expected to take 14,000 calls next week – 4,000 more than it would usually handle over the same period. Meanwhile, rival firm Zurich said it expects more than 2,500 calls about pensions freedom in the first week of the reforms.

However, while companies such as Fidelity, Scottish Widows, Standard Life and Aviva will open for business on 6 April, Royal London and Zurich will not take calls until the Tuesday, along with others including Axa and the Pru.

In a sign of the confusion surrounding the reforms one company, Fidelity, said it had seen an increase in calls from customers in recent weeks “but these mainly come from people who believe that the deadline to access their pensions is 6 April,” said a spokesperson.

From 6 April anyone over the age of 55 will be able to take what they want, when they want, from their pension funds and will no longer be herded into buying an annuity. Actuarial firm Hymans Robertson estimates that as much as £6bn will be released from pension pots in the first four months of the reforms.

However, the pensions minister Steve Webb has said that people should not rush to do anything.

“If I had a single message for people with a pension pot on 6 April it’s stay in bed,” he said. “Take the grandchildren on holiday – it’s the Easter holidays for goodness sake. If you don’t absolutely have to do something on 6 April why on earth would you?”

Those who do want access to their money may be disappointed both with their providers approach and the cost.

The Guardian’s survey found that while the majority of providers do not charge people to access their retirement savings, some will. Royal London, for example, will charge a one-off fee of £184 to take money out via flexible drawdown while Friends Life will allow four free withdrawals a year but will then charge £20 a time.

Other providers, such as Virgin, will not be offering customers the ability to access their cash over time. Virgin customers will either have to cash in their full pot or transfer their funds to an annuity provider or other pension scheme.

The government’s Pension Wise service, which will provide free advice to retirees, will be open for appointments on 6 April.

This news is reprinted from site http://www.theguardian.com/money/2015/mar/30/pension-providers-expecting-40-surge-in-inquiries-after-rule-change