Four out of five people exercising freedoms are taking their pot as cash, but a quarter of assets have moved to its own drawdown product, according to data on BlackRock’s bundled DC pensions book.
The provider says 1,152 of its scheme members over the age of 55 have accessed pension freedoms since April 6, representing £13.4m in assets.
Four out of five of those who have made withdrawals – 83 per cent – have taken all their pension as cash, representing 57 per cent of assets withdrawn, with an average fund withdrawal of £8,000. Twenty per cent have taken an uncrystallised funds pension lump sum and 63 per cent have taken a small pot, less than £10,000.
An emerging group of savers, 3 per cent of those who have used the new pension freedoms, with an average pot size of £138,154, have opted for BlackRock’s new Retirement Income Account drawdown product. This equates to 23 per cent of all assets withdrawn.
A further 14 per cent of retirees have opted for traditional annuity products, representing 20 per cent of assets.
BlackRock says a significant proportion of people have sought help with their decision, with 34 per cent taking formal financial advice and 61 per cent accessing the Government’s PensionWise service. Within these groups 21 per cent sought information or advice from both.
The provider runs around 300 schemes servicing around 300,000 members.
BlackRock UK defined contribution business head Paul Bucksey says: “The early signs indicate the emergence of a new norm. The pension freedoms have changed the way people are choosing to access their retirement savings – and for the better in our view, as people are using them to take more control of their finances. We were ready from day one and have been successfully paying out cash payments without exit fees, and also setting up new drawdown accounts for those who are looking for greater flexibility and want to remain invested.
“We have not been surprised by the take up for drawdown as an alternative to annuities. What this early data shows is that many people want to retain as much flexibility as possible. The BlackRock Retirement Income Account enables retirees to take a regular income which can be varied at any time, whilst continuing to benefit from investment exposure to markets.”