7th April 2015

Fidelity Worldwide Investment - Pension freedom trends over Bank Holiday

Coming into effect, Fidelity Worldwide Investment has already observed trends in customer requests and recurrent misunderstandings around the new pension freedoms.

Key trends are:

• While call centres were quiet over the weekend, Fidelity Retirement Services took over 1300 calls from customers last week, putting in expressions of interest ahead of the new rules coming into play.
• Over the Easter weekend, Fidelity Retirement Services experienced a lull with around 150 calls received
• The expressions of interest were mainly from customers looking to withdraw cash from their pots. In terms of our DC clients, 25% wanted to take their tax free cash only while 75% wanted to cash out completely or take a specific amount of money.
• Customers looking to withdraw their pots in full were not fully aware of the tax implications and most proceeded after the tax implications had been explained.
• Since last week, the call centre has been receiving two to three calls a day from people under the age of 55 who think they can access their savings now – most notable was a 23 year old who mistakenly thought they could get hold of their pot now!
• A handful of customers thought that the 6 April was a deadline to access their pension and not the beginning of the new rules.

Richard Parkin, Head of Retirement for Fidelity Worldwide Investment highlights that while call volumes were muted over the weekend, this was not the case for the week before where a significant increase was observed on average number of queries. He said:

“Comparing volumes between last week and the Bank Holiday weekend, it is clear that people quite rightly enjoyed the good weather and did not rush to access their funds on Monday.

“Most of the customers that have called Fidelity’s Retirement Service are members of the company pension schemes we manage wanting to take cash. Given that this is the new feature this is not unsurprising.  Generally behaviour seems reasonable with those wanting to cash out completely generally having smaller value pots and those with larger savings just looking to take tax-free cash. We have got a number of sizeable accounts looking to cash out completely but they seem to be the exception at this stage.

"We have seen that misunderstandings exist around aspects such as when you can access your funds. Since the new freedoms were announced, we’ve received a steady number of calls from people under the age of 55 who think they can access their funds under the new rules. Obviously as these reforms bed in, we would expect less of this.

“The Bank Holiday was just the start of the new rules and it is pleasing in some ways that we did not have a mad rush as it may mean people are properly researching their options before making these important decisions.”

Pensions, Investments, Pension Reforms