Pension freedom day – what customers asked about

Interest in full withdrawal of pension is low amongst those earliest to make use of the new pension freedoms, with just 7.7 per cent of Hargreaves Lansdown customers looking to do so on the first day of the new regime.

In the first published information on consumer trends under the new regime, the firm says barely 200 customers got in contact on the first day of the new pension freedoms, a Bank Holiday, but of those that did, 42 per cent wanted to talk about drawdown, with 17 per cent interested in ad-hoc lump sum withdrawals.

A further 10 per cent were interested in annuities, while 9 per cent called to discuss taxation on drawing a pension, 8 per cent topping up or opening a Sipp and 7 per cent to take tax-free cash only.

Taking full withdrawal, partial withdrawal and tax-free cash withdrawal together, over 31 per cent wanted to take at least some cash from their pot.

Tom McPhail, Head of Pensions Research: “It will take some time for a clear pattern to emerge in terms of how investors are looking to use the new freedoms. However a couple of things are already immediately apparent.

“Investors saving with a pension company which doesn’t offer a full range of choices are going to find themselves at a disadvantage and may have to move their money to get what they want.

Initial demand has been focused on an investment income rather than buying an annuity, though we do expect this balance to swing back to some extent in the weeks to come.

“Relatively few people are asking to take all their money out; we’ll be tracking the sums involved however in the main we expect it to be at the smaller end of pension pot sizes.

“We remain concerned that the Government has not set in place a consistent industry-wide tracking system to monitor how these new freedoms are used by investors.”